Seminar in Economics | with Alon Eizenberg
Welcome to this Higher Seminar in Economics organized by the Department of Economics, SSE. The seminar speaker is Alon Eizenberg, Hebrew University of Jerusalem who will present "An Empirical Analysis of Merger Efficiencies"
Abstract
We develop an econometric method to study merger efficiencies. Classification techniques are employed first to determine the sign of the merger’s effect on output levels in specific markets. These classifications are then combined with familiar oligopoly theory results to yield bounds on marginal cost savings. Applying this framework to the 2013 merger of US Airways and American Airlines we find that the merger led to output expansions in more than half of the markets where the sign of the output effect could be determined, and in at least 44% of the total number of markets that were directly affected by the merger and where the market structure was otherwise stable. Pro-competitive effects were more prevalent in larger markets and, to some extent, in markets that serve the merging carriers’ hubs. Averaging across the markets experiencing output expansions, the lower bound on the marginal cost reduction was slightly above 2 USD, capturing 0.8% of the market price. The analysis provides insights regarding the nature and magnitude of merger efficiencies.
More about the Speaker
The seminar takes place at Stockholm School of Economics, Sveavägen 65, room A750.
Please contact nicola.donohoe@hhs.se if you have any questions.