What can empirical merger analysis tell us?
Empirical analyses of proposed mergers provide information about the fine structure of demand. This information — particularly as it bears on whether the products of the merging firms are close demand substitutes — can be critical to the application of the localized competition theory of unilateral competitive effects of mergers among sellers of differentiated products set forth in Merger Guidelines 2.21.(15) Accordingly, econometric estimates of demand elasticities, when available, are typically much more informative than market shares in helping make inferences about whether such mergers will likely enhance market power.(16) Econometric studies of market power in the U.S. brewing industry during the 1970s highlight the value of going beyond market shares to understand the competitive roles of individual firms and brands.(17) Anheuser-Busch, the producer of Budweiser, was the market share leader but exercised little market power after 1975. Moreover, market shares did not strongly d
