Can we ignore spatial dependence when evaluating mergers?

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216224%3A14560%2F22%3A00129456" target="_blank" >RIV/00216224:14560/22:00129456 - isvavai.cz</a>

Result on the web

<a href="https://link.springer.com/content/pdf/10.1007/s00181-021-02055-x.pdf" target="_blank" >https://link.springer.com/content/pdf/10.1007/s00181-021-02055-x.pdf</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1007/s00181-021-02055-x" target="_blank" >10.1007/s00181-021-02055-x</a>

Result language

angličtina

Original language name

Can we ignore spatial dependence when evaluating mergers?

Original language description

This study explores whether antitrust authorities can use models that ignore spatial dependence in gasoline prices when assessing merger proposals. I estimate two nonspatial and one spatial model and compare merger simulation results based on these models. The identification strategy uses the abrupt change in ownership caused by takeovers of three chains, which generates virtually exogenous shocks in the local markets. The pure non-spatial fixed-effects panel model significantly underestimates the price changes and sometimes even mispredicts their direction. The fixed-effects panel model with added spatially weighted changes of the purchased stations’ price level performs better but can still understate the price changes. It also overstates the number of stations that notably change their prices. The SAR model should thus be preferred.

Czech name

—

Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

—

OECD FORD branch

50202 - Applied Economics, Econometrics

Project

<a href="/en/project/TL02000122" target="_blank" >TL02000122: A decision support system for merger cases in markets with homogeneous products and spatial differentiation</a><br>

Continuities

P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year

2022

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Empirical Economics

ISSN

0377-7332

e-ISSN

1435-8921

Volume of the periodical

62

Issue of the periodical within the volume

3

Country of publishing house

DE - GERMANY

Number of pages

22

Pages from-to

1323-1344

UT code for WoS article

000660787500001

EID of the result in the Scopus database

2-s2.0-85107805590