000170667 001__ 170667
000170667 005__ 20180122232854.0
000170667 037__ $$a329-2016-13075
000170667 041__ $$aen_US
000170667 245__ $$aMergers and Market Power in the US Nitrogen Fertilizer Industry
000170667 260__ $$c2014-05-28
000170667 269__ $$a2014-05-28
000170667 270__ $$mjmhumber@ucdavis.edu$$pHumber,   Jacob
000170667 300__ $$a24
000170667 336__ $$aConference Paper/ Presentation
000170667 520__ $$aNitrogenous fertilizer prices spiked in early 2010 despite the fact that natural gas prices, nitrogen fertilizer’s main production cost, have dramatically fallen during this time period.  We hypothesize that a merger which occurred between CF and Terra industries in 2010 exacerbated market power in an already concentrated industry, causing nitrogen fertilizer prices to increase.
To test this hypothesis, we propose a structural vector autoregressive (SVAR) model.  By including corn futures, natural gas and nitrogen fertilizer prices within an SVAR model we control for demand and supply shocks which affect the nitrogen fertilizer market.  The remaining variation in fertilizer prices at 2010 not explained by the model is attributed to the merger.  If we set this residual to zero, we can then use the SVAR model to forecast a counterfactual fertilizer price series which represents the price of nitrogen fertilizer in the absencebsence of the merger.  Applying this technique to the data suggests that the merger raised prices by roughly 75%.
This approach presents a middle-ground between the current methodologies used in the retrospective merger analysis literature.  It is more transparent than structural approaches such as Nevo (2000) which make strong assumptions on demand and market conduct.  Conversely, this time series approach is more applicable than the reduced form approaches such as Hastings (2004) that employ a difference in difference method and consequently rely on the existence of a credible control group.
000170667 542__ $$fLicense granted by Jacob Humber (jmhumber@ucdavis.edu) on 2014-05-29T03:08:18Z (GMT):

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000170667 650__ $$aIndustrial Organization
000170667 650__ $$aProduction Economics
000170667 700__ $$aHumber, Jacob
000170667 773__ $$d2014$$o24$$q2
000170667 8564_ $$s580533$$uhttp://ageconsearch.umn.edu/record/170667/files/AAEA%20Paper.pdf
000170667 887__ $$ahttp://purl.umn.edu/170667
000170667 909CO $$ooai:ageconsearch.umn.edu:170667$$pGLOBAL_SET
000170667 912__ $$nSubmitted by Jacob Humber (jmhumber@ucdavis.edu) on 2014-05-29T03:12:42Z
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000170667 912__ $$nMade available in DSpace on 2014-05-29T03:12:42Z (GMT). No. of bitstreams: 1
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  Previous issue date: 2014-05-28
000170667 982__ $$gAgricultural and Applied Economics Association>2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota
000170667 980__ $$a329