Ex-Post Merger Review and Divestitures

42 Pages Posted: 14 Nov 2013  

Richard Friberg

Stockholm School of Economics - Department of Economics

Andre Romahn

University of Navarra, IESE Business School

Date Written: December 1, 2012

Abstract

Divestitures have received little attention in ex-post evaluations of mergers. In partial remedy we simulate the effects of the Carlsberg-Pripps merger in the Swedish beer market and compare the predicted outcomes with those observed ex-post. There are no important price increases following the merger and prices of divested beers fell. Our merger simulations, that are based on a random coefficients logit model, capture these pricing patterns and suggest that the divestitures were important in limiting price increases. Knowledge of the retailer's markup rules allows us to discard retailer behavior as an explanation for the pricing patterns.

Keywords: merger simulation, ex-post merger review, divestitures, demand for beer

JEL Classification: K21, L11, L41, L66

Suggested Citation

Friberg, Richard and Romahn, Andre, Ex-Post Merger Review and Divestitures (December 1, 2012). IESE Business School Working Paper No. WP-1056-E. Available at SSRN: https://ssrn.com/abstract=2353527 or http://dx.doi.org/10.2139/ssrn.2353527

Richard Friberg

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46 8 736 9645 (Phone)
+46 8 720 7752 (Fax)

Andre Romahn (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Paper statistics

Downloads
80
Rank
253,898
Abstract Views
432