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Revision of CUDARE Working Paper 1030

Download the Paper (261 K, PDF file) - July 25, 2007 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing.

ABSTRACT:
The typical situation faced by antitrust authorities is to analyze a proposed manufacturer merger using scanner data at retail-level. Starting with a benchmark model of manufacturers' and retailers' sequential Bertrand-Nash pricing behavior, I perform counterfactual experiments to explore the relationship between downstream retailer pricing models and the resulting estimates of upstream mergers, in the absence of wholesale prices. Looking at scanner data for the ground coffee category sold at several retail chains in Germany I find that not considering retail pricing explicitly when analyzing the potential consequences of an upstream merger, implies simulated changes in welfare that are significantly different given the underlying model of retail pricing behavior. These findings are relevant for competition policy, and authorities should consider incorporating the role of retailers in upstream merger analyzes, especially in the presence of an increasingly consolidated retail food industry.

SUGGESTED CITATION:
Sofia B. Villas-Boas, "Using Retail Data for Upstream Merger Analysis" (July 25, 2007). Department of Agricultural & Resource Economics, UCB. CUDARE Working Paper 1030.
http://repositories.cdlib.org/are_ucb/1030