Oslo Economics has developed new tools to analyze price effects of mergers. The research was recently published in “Review of Industrial Organization”.
Harald Bergh, Arne R. Gramstad, and Jostein Skaar are the authors of the paper “Unilateral Price Effects and Vertical Relations Between Merging and Non-merging Firms”, which recently was published in the journal Review of Industrial Organization. The paper can be accessed here. (behind paywall, non-downloadable full text version can be accessed here).
The project emerged from Oslo Economics’ aid to Telia in the merger between Telia and Phonero, which was cleared in 2017. Before the merger, Phonero was dependent on buying access to the mobile network from a downstream competitor, which had consequences for the price effects of the merger.
In the paper, the authors show how price effects of mergers are affected if the merger also affects vertical relations between merging and non-merging parties. Traditional quantitative measures of price pressure that are used as parts of the merger procedure may thus provide biased results.
The project was funded by The Price Regulation Fund (“Det alminnelige prisreguleringsfond”) which is managed by the Norwegian Competition Authority. Oslo Economics has received funding from the fund on two past occasions, both related to merger analysis. One of these projects resulted in a paper published in Review of Industrial Organization. The second project is ongoing and concerns empirical ex-post analyses of merger price effects.
