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Mergers and sunk costs: An application to the ready-mix concrete industry

Publication ,  Journal Article
Collard-Wexler, A
Published in: American Economic Journal: Microeconomics
January 1, 2014

Horizontal mergers have a large impact by inducing a long-lasting change in market structure. Only in an industry with substantial entry barriers is a merger not immediately counteracted by postmerger entry. To evaluate the duration of the effects of a merger, I use the model of Abbring and Campbell (2010) to estimate demand thresholds for entry and for exit. These thresholds, along with the process for demand, are estimated using data from the ready-mix concrete industry. Simulations predict that a merger from duopoly to monopoly generates between nine and ten years of monopoly in the market.

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Published In

American Economic Journal: Microeconomics

DOI

EISSN

1945-7685

ISSN

1945-7669

Publication Date

January 1, 2014

Volume

6

Issue

4

Start / End Page

407 / 447

Related Subject Headings

  • 14 Economics
 

Citation

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MLA
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Collard-Wexler, A. (2014). Mergers and sunk costs: An application to the ready-mix concrete industry. American Economic Journal: Microeconomics, 6(4), 407–447. https://doi.org/10.1257/mic.6.4.407
Collard-Wexler, A. “Mergers and sunk costs: An application to the ready-mix concrete industry.” American Economic Journal: Microeconomics 6, no. 4 (January 1, 2014): 407–47. https://doi.org/10.1257/mic.6.4.407.
Collard-Wexler A. Mergers and sunk costs: An application to the ready-mix concrete industry. American Economic Journal: Microeconomics. 2014 Jan 1;6(4):407–47.
Collard-Wexler, A. “Mergers and sunk costs: An application to the ready-mix concrete industry.” American Economic Journal: Microeconomics, vol. 6, no. 4, Jan. 2014, pp. 407–47. Scopus, doi:10.1257/mic.6.4.407.
Collard-Wexler A. Mergers and sunk costs: An application to the ready-mix concrete industry. American Economic Journal: Microeconomics. 2014 Jan 1;6(4):407–447.

Published In

American Economic Journal: Microeconomics

DOI

EISSN

1945-7685

ISSN

1945-7669

Publication Date

January 1, 2014

Volume

6

Issue

4

Start / End Page

407 / 447

Related Subject Headings

  • 14 Economics