Merger Effects and Antitrust Enforcement: Evidence from US Retail
We document the effects of a comprehensive set of US retail mergers. On average, prices increase by 1.5% and quantities decrease by 2.3%, with significant heterogeneity in outcomes across mergers. Price changes correlate with the screens codified in the Horizontal Merger Guidelines. Through a model of enforcement, we find that agencies challenge mergers they expect would increase average prices more than 8–9%. Modest increases in stringency reduce prices and the prevalence of approved anti-competitive mergers, with minimal impacts on blocked pro-competitive mergers, at a significantly greater agency burden. Our findings inform the debate over whether antitrust enforcement has been lax.
The first version of this paper was circulated with the title "Have Mergers Raised Prices? Evidence from US Retail." We are grateful to Christoph Carnehl, José Ignacio Cuesta, Jan De Loecker, Jan Eeckhout, Francisco Garrido, Igal Hendel, Daniel Hosken, Francine Lafontaine, Alex MacKay, Ioana Marinescu, Stephen Martin, Joe Mazur, Aviv Nevo, Ariel Pakes, Rob Porter, Mar Reguant, Nancy Rose, Andrew Sweeting, Bill Rogerson, Mike Vita, Mike Whinston, and Ali Yurukoglu for useful feedback. John Asker, Josh Feng, Gabrielle Rovigatti, and Matthew Weinberg provided helpful discussions. JD Salas provided excellent research assistance, as did Aisling Chen, Rosario Cisternas, Avner Kreps, Marina Siqueira, and Yintian Zhang. We are also grateful for help from Aaron Banks, Katherine Daehler, Ethan Nourbash, Nathan Friedle, Denis Gribenica, Tianshi Wang, and numerous other research assistants. This project was funded by grants from the Center for Equitable Growth and the National Science Foundation (SES-2116934). Researcher(s) own analyses calculated (or derived) based in part on data from Nielsen Consumer LLC and marketing databases provided through the NielsenIQ Datasets at the Kilts Center for Marketing Data Center at The University of Chicago Booth School of Business. The conclusions drawn from the NielsenIQ data are those of the researcher(s) and do not reflect the views of NielsenIQ. NielsenIQ is not responsible for, had no role in, and was not involved in analyzing and preparing the results reported herein. All errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- Mergers can increase prices if the merging parties gain market power due to the deal. They can decrease prices if the union induces cost...