Post-merger price dynamics matters, so why do merger retrospectives ignore it?

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The overwhelming majority of retrospective merger studies pool the post-merger data to estimate the average price effect of the merger. Pooled post-merger estimates ignore key information about price dynamics and are unable to identify if post-merger prices revert to pre-merger levels within the same time period. We provide evidence—from a meta-analysis of over 600 previous market-level price effect estimates, and a set of Monte Carlo experiments—that using pooled models often leads to erroneous conclusions: for example by wrongly concluding that the merger increased prices, even when this price increase was only temporary.
Original languageEnglish
Pages (from-to)403-429
Number of pages27
JournalReview of Industrial Organization
Issue number3
Early online date29 Jul 2019
Publication statusPublished - Nov 2019

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