Review of Industrial Organization

, Volume 52, Issue 3, pp 473–496 | Cite as

Ex-post Evaluation of Mergers in the Supermarket Industry

Article

Abstract

In this paper we quantify the effects of horizontal mergers in the supermarket sector that took place in the US between 2003 and 2005. We contribute to the growing literature on ex-post merger evaluations in three ways: (1) we propose a cleaner identification strategy that results from the different event dates; (2) we quantify the effects on prices, but also on variety; (3) we show that the estimated effects exhibit heterogeneity and explain part of that heterogeneity with event characteristics. Our results indicate no effect on the average prices, but that total product variety in a store goes up by more than \(3\%\) following a merger. We find that the increase in variety after a merger is driven by stores that are not directly involved in the events, for whom the increase is larger than \(4\%\).

Keywords

Mergers Supermarkets Ex-post evaluation Variety 

Notes

Acknowledgements

We would like to thank the editor (Lawrence White) and two anonymous referees, as well as comments from Mike Abito, Javier Donna, and John Kwoka. This research was funded by a cooperative agreement between the USDA/ERS and Northwestern University, but the views expressed herein are those of the author and do not necessarily reflect the views of the U.S. Department of Agriculture. Financial support from Fundação para a Ciência e Tecnologia is also gratefully acknowledged.

Supplementary material

11151_2017_9608_MOESM1_ESM.pdf (177 kb)
Supplementary material 1 (pdf 176 KB)

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2017

Authors and Affiliations

  1. 1.Chapel HillUSA
  2. 2.FGV EPGE Brazilian School of Economics and FinanceRio de JaneiroBrazil

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