The Effect of Mergers on Consumer Prices: Evidence from Five Selected Case Studies
In this paper we propose a method to evaluate the effectiveness of U.S. horizontal merger policy and apply it to the study of five recent consumer product mergers. We selected the mergers from those that, from the public record, seemed to be most problematic for the antitrust agencies. Thus we estimate an upper bound on the likely price effect of completed mergers. Our study employs retail scanner data and uses familiar panel data program evaluation procedures to measure price changes. Our results indicate that four of the five mergers resulted in some increases in consumer prices, while the fifth merger had little effect.
The opinions expressed in this paper are those of the authors and do not reflect those of the Federal Trade Commission, its Commissioners, its staff, or the National Bureau of Economic Research. We are indebted to Sara Senatore, Van Brantner, and Joe Remy for providing excellent research assistance; to Aviv Nevo, Paul Pautler, David Reiffen, John Simpson, Steven Tenn, and Mike Vita for comments; and to Robert E. Hall for suggesting our data source. All remaining errors are our own.