Comment on Carlton and Gertner, "Market Power and Mergers in Durable-Good Industries"

Abstract

IT is a pleasure to have the opportunity to comment on Dennis Carlton and Robert Gertner's article on market power and mergers in durablegoods industries. The article is a fine one that raises all the questions that should be addressed in a merger analysis in markets for durable goods. In my comments, I happily accept their framework for analysis and make some suggestions regarding how to interpret the quantitative and qualitative effects they identify. I noticed that this research was inspired by the opportunity of one of the authors to make a presentation on behalf of a major tractor company in support of an acquisition in the tractor market. It seems to me, especially in view of the Federal Trade Commission's (FTC) support for this conference, that what is needed in response is some public interest work, such as the FTC's staff regularly provides. In this case, it is the consumers of tractors, that is, farmers, who need some representation. So, without bothering to ask the permission of FTC Bureau of Economics Director David Scheffman, I shall adopt his role, seeking to evaluate an acquisition in the tractor industry, with the Carlton and Gertner article advocating approval of the acquisition.