Mergers and difference-in-difference estimator: Why firms do not increase prices?

Juan Luis Jiménez*, Jordi Perdiguero

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

3 Citations (Scopus)

Abstract

Difference-in-difference methods are being increasingly used to analyze the impact of mergers on pricing and other market equilibrium outcomes. Using evidence from an exogenous merger between two retail gasoline companies in a specific market in Spain, this paper shows how concentration did not lead to a price increase. In fact, the conjectural variation model concludes that the existence of a collusive agreement before and after the merger accounts for this result, rather than the existence of efficient gains. This result may explain empirical evidence reported in the literature according to which mergers between firms do not have significant effects on prices.

Original languageEnglish
Pages (from-to)285-311
Number of pages27
JournalEuropean Journal of Law and Economics
Volume45
Issue number2
DOIs
Publication statusPublished - 1 Apr 2018

Keywords

  • Conjectural variation
  • Difference-in-difference
  • Gasoline market
  • Mergers

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