Ex-Post Merger Review and Divestitures
42 Pages Posted: 14 Nov 2013
Date Written: December 1, 2012
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: Suggested Citation