We provide an ex-post analysis of the 2001 merger between the two largest brewers on the Swedish beer market. Difference-in-difference estimates suggest low price effects of the merger. This is well matched by a merger simulation, using a random coefficient logit model, which predicts price increases of only 0.4 percent. Knowledge of the retailers markup rules allows us to discard retailer behavior as an explanation for the pricing patterns. We further establish that without the divestitures required by the competition authorities, the price increase would have more than doubled to 1 percent (even though still low in absolute terms).JEL Classification: K21, L11, L41, L66.
How does cost pass-through to prices depend on the set of products a multiproduct firm owns? Using a structural demand model for the Swedish beer market, we simulate equilibrium cost pass-through for varying counterfactual ownership patterns. We find that a firm with a larger number of products in its portfolio and a higher degree of substitutability among these products adopts a lower pass-through of costs. While the direction of results is robust, our simulations show that the muting effect on passthrough is limited when comparing pass-through by stand-alone firms to pass-through under the actual, moderately concentrated market structure.
Did the Internet make international markets more integrated? To address this question, we study long-term international price differences and their speed of convergence, based on a unique data base for identical goods sold in both online and traditional "brick-and-mortar" distribution channels, covering ten European countries. We find that long-term international price differences are closely comparable between both distribution channels. Furthermore, international price differences converge only slightly faster online than offline, and the differences in the international price differences between online and offline converge at a very fast rate. Finally, regardless of the distribution channel, long-term price differences are lower and converge faster within the same currency union. Our findings imply that online markets are currently not more integrated than traditional markets.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.