The Effect of Mergers in Search Markets: Evidence from the Canadian Mortgage Industry

• 成果类型: Article
• 署名作者: Allen, Jason; Clark, Robert; Houde, Jean-Francois
• 署名单位: Bank of Canada; Universite de Montreal; HEC Montreal; Universite de Montreal; University of Pennsylvania
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.104.10.3365
• 发表日期: 2014
• 页码: 3365-3396
• 关键词: price dispersion; empirical-evidence; retail markets; COMPETITION; DISCRIMINATION; MODEL; differentiation; consolidation; INFORMATION; COSTS

摘要

We examine the relationship between concentration and price dispersion using variation induced by a merger in the Canadian mortgage market. Since interest rates are determined through a search and negotiation process, consolidation weakens consumers' bargaining positions. We use reduced-form techniques to estimate the mergers' distributional impact, and show that competition benefits only consumers at the bottom and middle of the transaction price distribution, and that mergers reduce the dispersion of prices. We illustrate that these effects can be explained by the presence of search frictions, and that the average effect of mergers on rates underestimates the increase in market power.