Foaming up a milk empire? Projected effects of a dairy merger
2022
Badruddoza, Syed | McCluskey, Jill J. | Carlson, Andrea C.
The recent bankruptcy of Dean Foods (DF) and subsequent acquisition of a major share by Dairy Farmers of America (DFA) raised an antitrust complaint which led to DF divesting some assets. The current article empirically analyzes the economic impact of a hypothetical merger between DF and DFA. We use retail scanner data of 2008–2018 under a random‐coefficient discrete choice framework. Assuming a constant marginal cost, we find that the merger may slightly increase retail prices of cow milk products‐‐especially organic ones‐‐across the market and the hypothetical market power of DFA in the long run.
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