Abstract: Using information local to the pre-merger equilibrium, we derive approximations
of the expected changes in prices and welfare generated
by a merger. We extend the pricing pressure approach of recent work
to allow for non-Bertrand conduct, adjusting the diversion ratio and
incorporating the change in anticipated accommodation. To convert
pricing pressures into quantitative estimates of price changes, we multiply
them by the merger pass-through matrix, which (under conditions
we specify) is approximated by the pre-merger rate at which cost increases
are passed through to prices. Weighting the price changes by
quantities gives the change in consumer surplus.