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Merger simulations of unilateral effects : what can we learn from the UK brewing industry?

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Slade, Margaret E. (2006) Merger simulations of unilateral effects : what can we learn from the UK brewing industry? Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.767).

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Abstract

I discuss the use of simulation techniques to evaluate unilateral effects of horizontal mergers and
the pitfalls that one can encounter when using them. Simple econometric models are desirable
because they can be implemented in a short period of time and can be understood by non experts.
Unfortunately, their predictions are often misleading. Complex models are more reliable but they
require more time to implement and are less transparent. The use of merger simulations and the
sensitivity of predictions to modeling choices is illustrated with an application to mergers in the UK
brewing industry. There have been a number of brewing mergers that have changed the structure
of the UK market, as well as proposed but unconsummated mergers that would have had even
more profound effects. I assess two of them: the successful merger between Scottish&Newcastle and
Courage and the proposed merger between Bass and Carlsberg–Tetley.

Item Type:

Working or Discussion Paper (Working Paper)

Subjects:

H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor

Divisions:

Faculty of Social Sciences > Economics

Library of Congress Subject Headings (LCSH):

Brewing industry -- Mergers -- Great Britain

Series Name:

Warwick economic research papers

Publisher:

University of Warwick, Department of Economics

Place of Publication:

Coventry

Official Date:

October 2006

Dates:

Date	Event
October 2006	Published

Number:

No.767

Number of Pages:

Status:

Not Peer Reviewed

Access rights to Published version:

Open Access

Funder:

Economic and Social Research Council (Great Britain) (ESRC)

Adapted As:

Version or Related Resource:

Slade, M. (forthcoming) Merger simulations of unilateral effects: what can we learn from the UK brewing industry? In B. Lyons (ed) Cases in European Competition Policy: The Economic Analysis, Cambridge University Press, forthcoming.

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