This award supports two empirical projects. The first project examines horizontal mergers and acquisitions in the paper and paperboard industry. The second project studies retail sales in supermarkets and the purchase behavior of consumers. The first project analyzes the effect of mergers in the paper and paperboard industry. A data set on US paper and paperboard plants between 1979 and 1995 has been assembled. The effects of mergers on price, on the behavior of rival firms and on welfare are studied. A theoretical model of investment in new capacity is analyzed and taken to the data. Changes in investment decisions and market shares are characterized based on pre and after merger comparisons. The parameters of the investment model are estimated and examined to determine cost synergies, welfare effects and the profitability of mergers. The second project, studies temporary price reductions, or sales, for ketchup products in supermarkets in Springfield, Missouri, and Sioux Falls, South Dakota, between 1986 and 1988. The data consist of daily shelf prices and quantities purchased in 80 percent of the supermarkets in the region. Ketchup is storable for extended periods of time. The data indicate that intertemporal effects in demand are important. A model of intertemporal pricing is considered in which demand accumulates in the number of time periods since the last sale. The analysis considers competition between retailers for accumulated shoppers. The parameters of the model are estimated and the effects of competition and demand accumulation are analyzed.
