Brewed in North America

Mergers, marginal costs, and efficiency

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We show how production and pricing data can be used to estimate merger-related efficiencies using pre-merger data, and we assess the changes in efficiency and marginal costs that are expected to occur post-merger. To do this, we jointly estimate firm level returns to scale, technical change, TFP growth, and price-cost markups. We implement our empirical model using data for the North American (US and Canadian) brewing industry, and we use the estimated model of firm technology to evaluate the changes that are associated with the merger between Molson and Coors. We forecast nontrivial increases in returns to scale and declines in marginal costs and we verify those results by analyzing the impact of the merger retrospectively using post-merger data.

Original languageEnglish (US)
Pages (from-to)24-65
Number of pages42
JournalInternational Journal of Industrial Organization
Volume59
DOIs
StatePublished - Jul 1 2018

Fingerprint

Costs
Brewing
Mergers
Marginal cost
Industry
Returns to scale
TFP growth
Empirical model
Markups
Pricing
Technical change
Brewing industry

All Science Journal Classification (ASJC) codes

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

Cite this

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abstract = "We show how production and pricing data can be used to estimate merger-related efficiencies using pre-merger data, and we assess the changes in efficiency and marginal costs that are expected to occur post-merger. To do this, we jointly estimate firm level returns to scale, technical change, TFP growth, and price-cost markups. We implement our empirical model using data for the North American (US and Canadian) brewing industry, and we use the estimated model of firm technology to evaluate the changes that are associated with the merger between Molson and Coors. We forecast nontrivial increases in returns to scale and declines in marginal costs and we verify those results by analyzing the impact of the merger retrospectively using post-merger data.",
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Brewed in North America : Mergers, marginal costs, and efficiency. / Grieco, Paul L E.; Pinkse, Joris; Slade, Margaret.

In: International Journal of Industrial Organization, Vol. 59, 01.07.2018, p. 24-65.

Research output: Contribution to journalArticle

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