Economics Research Works

Permanent URI for this collectionhttp://hdl.handle.net/1903/9

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Start date: 2013Subject: search.filters.subject.oligopoly

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    Replication Code for "Should We Expect Merger Synergies To Be Passed Through to Consumers?"
    (2024-07-01) Sweeting, Andrew; Lecesse, Mario; Tao, Xuezhen
    When reviewing horizontal mergers, antitrust agencies balance anticompetitive incentives, resulting from market power, with procompetitive incentives, created by efficiencies, assuming complete information and static, simultaneous move Nash equilibrium play. These models miss how a merged firm may prefer not to pass through efficiencies when rivals would respond by lowering their prices. We use an asymmetric information model, where rivals do not observe the size of the realized cost efficiency, to investigate how this incentive could affect post-merger prices. We highlight how the strength of this incentive will depend on the market structure of non-merging rivals and discuss alternative settings where similar issues arise.
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    Replication code for Dynamic Oligopoly Pricing with Asymmetric Information: Implications for Horizontal Mergers
    (2024-07-01) Sweeting, Andrew; Yao, Xinlu; Tao, Xuezhen
    We model repeated pricing by differentiated product firms when each firm has private information about its serially-correlated marginal cost. In a fully separating equilibrium of the dynamic game, signaling incentives can lead equilibrium prices to be signif icantly above those in a static, complete information game, even when the possible variation in the privately-observed state variables is very limited. We calibrate our model using data from the beer industry, and show that, without any change in conduct, our model can explain increases in price levels and changes in price dynamics and cost pass-through after the 2008 MillerCoors joint venture. The software in this repository allows all of the simulated numbers to be recalculated. It provides information on where the IRI dataset used in the empirical work can be found. Code to process the data is included.