Michael Weichselbaumer

My research focus is empirical industrial organization. I have started with empirical analysis of the determinants of mergers and acquisitions (M&A). That was interesting because sometimes there appear to be 'merger waves', meaning many more M&A transactions happen in an interval of a few years compared to most other years. Several authors give motives for that. We compared some of these motives for their empirical plausibility; for example, that high share prices based on overvaluation may make it relatively 'cheap' to buy another company.

Afterwards I did a lot of work on empirical models of (procurement) auctions, in particular, data and estimation driven work. We could confirm that in the economic crisis, 2008-2009, competition increased and markups (prices > costs) decreased. In another paper on procurement and the crisis, we found evidence that firms engage in labour hoarding during the crisis, something that they did not do before the crisis in the sector we look at (construction).

Currently I combine the two topics by evaluating the effect of mergers on competition in EU procurement. I chose two large countries, Germany and the UK, to see if mergers have an effect on competition --- as measured by the number of bidders in auctions --- when competition authorities review an M&A transaction. The focus is on reviews triggered by target size thresholds. At another, larger threshold, transactions are transferred for review by the EU's Directorate General for Competition. I also want to see if this referral leads to a different effect on competition.

In another current paper I use the results of product tests of a consumer association to find out if prices and exit respond to the disclosed quality of products. Consumers often cannot judge quality of products --- think of household appliances like washing machines, or an autonomous vacuum cleaner, and mundane, yet useful products like sunscreen, toothpaste, or a child safety seat. Consumer associations in many countries try to support consumers in making consumption decisions they are happy with because the quality is as expected. We find that durable products (like a washing machine, bought very infrequently and not being used up) increase their prices when product tests show high quality; for non-durables (sunscreen or toothpaste, which are used up and bought more frequently) we find a decrease in prices for good products. Exit of products rises for worse products --- although very bad products break this pattern.

One of my latest papers is on unobserved quality heterogeneity in the used car market. Other researchers found a price discontinuity for used cars at multiples of 10,000 of mileage. I was curious if there might be an interaction with quality, which seemed meaningful to me, because of the way standard models about asymmetric information and in particular the used car market is discussed. Luckily, I remembered that I once saw that the European Commission investigated the used car market. Kindly and transparently, they let me use the data, which is the result of a large scale survey on quality experience of used car buyers across the EU. My results show a quality discontinuity that also occurs at the 10,000 multiples of mileage.

For a list of all my papers, click here.