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SUMMARY:How Divestitures Affect Bargaining Power
DESCRIPTION:11:30 - 12:30Francine D. Blau Room 3.3.002B+C // This paper studies how bargaining power is affected by merger and divestiture policies. I provide a new empirical framework to compute bounds on brand-level bargaining weights using widely available sales data. Next, I exploit the variation in brand ownership caused by a large merger, cleared conditional on divestiture, in the U.S. deodorant market, to quantify the extent to which divestitures affect bargaining power thereby final prices and consumer surplus. I use the estimated model to simulate the upstream bargaining weights in the absence of a merger. Relative to this benchmark, I find that, on average, the upstream bargaining power associated with the divested brands increased and the upstream bargaining power of the merger decreased. Overall consumer surplus increased. Last, I simulate the effects of counterfactual divestiture packages on consumer surplus. A divestiture to the same buyer including less divested brands could have been consumer welfare-enhancing.
DTSTART;VALUE=DATE:20230628
DTEND;VALUE=DATE:20230628
DTSTAMP:20230530T220000Z
URL:https://www.diw.de/en/diw_01.c.873858.en/events/how_divestitures_affect_bargaining_power.html
ORGANIZER;CN=Christina Stadler:mailto:cstadler@diw.de
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