How much do mergers raise price?

The answer--about seven percent for a 3-to-2 merger-- comes from a natural experiment constructed from prices of rental cars at different airports.

Table 6.―Predictions from Natural Experiments Compared with Benchmarks

Number of Firms	Increase in HHI	Predicted Market-Wide Average Percentage Price Increase
		Our Prediction	Cournot Benchmark	Bertrand Benchmark
2	.500	16.1	20.0	12.0/15.6
3	.222	7.1	8.9	4.9/5.4
4	.125	4.0	5.0	2.7/2.7
5	.080	2.6	3.2	1.6/1.7

Each row in the table above shows how the estimated merger effects relate to the predicted merger effects from standard theoretical merger models (Cournot and Bertrand).  So for example, the first row denotes a 2-to-1 merger (2 firms going to 1, or merger to monopoly) which leads to a 16.1% price increase.  The second row is our aforementioned 3-to-2 merger which leads to a 7.1% price increase.

Because the estimated effects are close to those from the models, the authors interpret their results as lending "some support to reliance on model-based tools for predicting merger effects." 

DISCLAIMER:  I am one of the authors.