Saved in:
| Main Author: | |
|---|---|
| Format: | Preprint |
| Published: |
2024
|
| Subjects: | |
| Online Access: | https://arxiv.org/abs/2407.12924 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1866916962319204352 |
|---|---|
| author | Koh, Paul S. |
| author_facet | Koh, Paul S. |
| contents | Antitrust authorities routinely rely on market concentration measures to assess the potential adverse effects of mergers on consumer welfare. Using a first-order approximation argument with logit and CES demand, I derive the relationship between the welfare effect of a merger on consumer surplus and the change in the Herfindahl-Hirschman Index (HHI). My results suggest that merger harm is correlated with the merger-induced change in HHI, and the proportionality coefficient depends on the price responsiveness parameter, market size, and the distribution of market shares within and across the merging firms. I present numerical validation of my formula along with an empirical illustration. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2407_12924 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Concentration-Based Inference for Evaluating Horizontal Mergers Koh, Paul S. General Economics Economics Antitrust authorities routinely rely on market concentration measures to assess the potential adverse effects of mergers on consumer welfare. Using a first-order approximation argument with logit and CES demand, I derive the relationship between the welfare effect of a merger on consumer surplus and the change in the Herfindahl-Hirschman Index (HHI). My results suggest that merger harm is correlated with the merger-induced change in HHI, and the proportionality coefficient depends on the price responsiveness parameter, market size, and the distribution of market shares within and across the merging firms. I present numerical validation of my formula along with an empirical illustration. |
| title | Concentration-Based Inference for Evaluating Horizontal Mergers |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2407.12924 |