Incorporating Quality Considerations in Merger Analysis:

• Date: 01 June 2018
• DOI: 10.1177/0003603X18770064
• Author: Debanjan Mitra,Christine Moorman,Peter N. Golder
• Published date: 01 June 2018

Article

Incorporating Quality

Considerations in Merger

Analysis: Why, What, When,

and How?

Peter N. Golder*, Debanjan Mitra**, and Christine Moorman***

Abstract

Mergers are common occurrences reshaping the competitive landscape in many industries. Tradi-

tionally, merger analysis has focused on the impact of the merger on price. However, price analysis

ignores the other half of the value proposition for customers, namely, the quality of the product or

service being offered. The authors argue that merger analysis must fully incorporate quality

considerations in order to understand how customers will be affected by the merger. Some mergers

will promote quality, while other mergers will inhibit quality depending on a wide variety of product,

market, and customer characteristics. In order to guide merger analysts in incorporating quality

considerations, the authors provide a detailed framework for answering why, what, when, and how

quality should be considered in merger analysis.

Keywords

quality, perceived quality, merger, antitrust, competition, marketing, price, value, product, service

I. Introduction

It is widely believed that a competitive market is a healthy market in which multiple companies

provide products and services to customers at fair prices and also strive over time to increase the

quality of their offerings. In contrast, monopolistic business environments can allow companies to

charge higher prices, serve fewer customers, and have fewer incentives to improve quality. These

beliefs provide the basis for antitrust laws, the ultimate goal of which is to promote competition in

markets and, ultimately, generate more consumer welfare than may exist in less competitive markets.

For decades, U.S. antitrust enforcement has focused on mergers because of their potential impact on

competition and ultimately on the prices paid by customers. While important, customers care not only

*Tuck School of Business, Dartmouth College, Hanover, NH, USA

**Warrington College of Business Administration, University of Florida, FL, USA

***Fuqua School of Business, Duke University, Durham, NC, USA

Corresponding Author:

Peter N. Golder, Tuck School of Business, Dartmouth College, 100 Tuck Hall, Hanover, NH, USA.

Email: peter.n.golder@tuck.dartmouth.edu

The Antitrust Bulletin

2018, Vol. 63(2) 222-236

ªThe Author(s) 2018

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DOI: 10.1177/0003603X18770064

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