Global giants and local stars: How changes in brand ownership affect competition

10.03.2020 12:15 – 13:15

GENEVA TRADE AND DEVELOPMENT WORKSHOP / ABSTRACT

Accumulating evidence points to rising market concentration and higher markups but has not produced a consensus on the amount of harm caused to consumers. We apply recent methods from international economics that can be implemented over many products and markets because of their minimal data requirements. The power of these methods is illustrated using two product categories where rising concentration is a plausible concern: beer and spirits. We estimate that when foreign firms take over local brands, they tend to raise costs and lower appeal. Using the estimated model, we simulate the consequences of counterfactual national merger regulation. The beer price index would be 4-7% higher had the USDOJ not forced divestitures. On the other hand, 14-30% savings could have been obtained in South America by emulating the pro-competition policies of the US and EU.

Lieu

Bâtiment: IHEID

Graduate Institute
Maison de la Paix
Petal 2, Room S4
2 Chemin Eugène-Rigot
1202 Geneva

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