When post-merger price effect becomes smoothed over time: A case of a gasoline market merger

This paper provides empirical evidence using a difference-in-difference estimation strategy for the post-merger price effect caused by the acquisition of two branded chains for gasoline retail. On the one hand, mark-ups of the Hungarian retail gasoline market increased significantly after the takeover contract came into force. On the other hand, an additional price increase occurred after all of the acquired stations had offered the same services as the acquiring firm, even though implementing these changes might require a year after the takeover contract came into force. This suggests that further price effects may occur when the merger procedure requires a longer period. Moreover, the additional price increase suggests that examining product differentiation on the market is necessary to evaluate merger effects.

Automated summary

This paper provides empirical evidence on the post-merger price effect in the gasoline retail market and finds that mark-ups increase significantly after the takeover contract comes into force. Additionally, there is an additional price increase when the acquired stations offer the same services as the acquiring firm, even though the implementation may take a year.