Churn Versus Diversion in Antitrust
An Illustrative Model
Bibliographic Data
| ID | 9724731 |
|---|---|
| Authors | Yongmin Chen (University of Colorado Boulder), Marius Schwartz (0000-0003-0079-9417, Georgetown University) |
| Year | 2016 |
| Volume | 83 |
| Issue | 332 |
| Pages | 564-583 |
| Publication date | 2016-10-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/ecca.12207 |
| OpenAlex | W2512013654 |
| Language | EN |
| References cited | 15 |
An important question in horizontal merger analysis is what share of a firm's lost output from a unilateral price increase will divert to its merger partner. This ‘diversion ratio’ is often estimated using data on customer switching from a firm to its rivals (‘churn’). We use a tractable oligopoly model to investigate the potential biases of such estimates, depending on what caused the churn: shifts in quality or marginal cost of the firm or of a rival; or demand‐side shifts due to changed circumstances or learning about product attributes. With demand‐side shifts, churn can be greater between more distant competitors
Business · Competition (biology) · Competitor analysis · Cournot competition · Economics · Industrial organization · Marginal cost · Market share · Microeconomics · Oligopoly · Product (mathematics) · Quality (philosophy) · Consumer Market Behavior and Pricing · Digital Platforms and Economics · Marketing · Merger and Competition Analysis
| Highly cited | No |
|---|