کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
5077889 | 1477314 | 2015 | 18 صفحه PDF | دانلود رایگان |
- We study the role of divestitures in a large merger on the Swedish beer market.
- Diff-in-diff estimates suggest that prices of divested products fall by 3 %.
- We base simulations on an estimated random coefficients logit demand system.
- Price hikes for Carlsberg fall from 3 to 1.6 % as a result of divestitures.
- We investigate what characteristics of divestitures that matter most for prices.
We investigate the effect of divestitures on prices and welfare following the Carlsberg-Pripps merger in the Swedish beer market. Both difference-in-difference estimation and simulations using a random coefficients logit model suggest that divestitures are important for dampening price increases. Prices of divested brands fall by around 3% and the predicted price increase for Carlsberg falls from 3 to 1.6% as a result of the divestitures. To guide practice on divestitures, we investigate the role of the recipient and the number and characteristics of the divested products by simulating post-merger outcomes for all relevant cases. We find that in this setting with large multiproduct firms, the competition authority's most effective means to dampen adverse post-merger outcomes are to aim for a small recipient firm and attain a large number of divested products. Enforcing larger divestitures in terms of market share and raising the average cross-price elasticity between the merging parties' divested and retained products strengthen the dampening effect further.
Journal: International Journal of Industrial Organization - Volume 42, September 2015, Pages 1-18