Merger control in differentiated product industries
|Title:||Merger control in differentiated product industries||Authors:||Mariuzzo, Franco
Walsh, Patrick P.
|Permanent link:||http://hdl.handle.net/10197/948||Date:||May-2005||Abstract:||Thresholds defined on the level and change in the HHI (Herfindahl-Hirschmann Index) applied to market shares seem to be the main instrument to select notified mergers for investigation in both the EU and US. We question the use of such a selection rule in differentiated products industries. We propose the use of a structural approach to apply HHI thresholds based on profit shares rather than market shares. We illustrate our point using product data for Retail Carbonated Soft Drinks (Price, Market Share and Characteristics). We estimate company (product) mark-ups consistent with a structural model of equilibrium, using demand primitives from a Nested Logit model and a Random Coefficient model. We provide an example where the HHI thresholds based on profit shares identify potentially damaging mergers not captured by applying thresholds to output shares, or conversely, identify mergers of no concern that would be selected on the basis of output shares.||Type of material:||Working Paper||Publisher:||University College Dublin. School of Economics||Copyright (published version):||UCD School of Economics 2005||Keywords:||Market Shares;Market power;Differentiated products industries;Merger screening||Subject LCSH:||Consolidation and merger of corporations
|Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Politics and International Relations Research Collection|
Economics Working Papers & Policy Papers
Geary Institute Research Collection
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