Mary W. Sullivan

• United States Federal Trade Commission

Economists at the Federal Trade Commission pursue the agency’s competition and consumer protection missions. In this year’s essay, in antitrust, we discuss two recent mergers that involved Rx drugs: First, we describe key elements of the inquiry into the Express Scripts/Medco transaction in the pharmacy benefit management industry. Next, we analyze...

The unprecedented migration of Andersen's clients that followed Andersen's indictment in March 2002 potentially placed a large burden on successor auditors' audit resources. We refer to this strain, measured at the local-office level, as auditor capacity stress. We examine the effect of auditor capacity stress on investor assessments of audit quali...

The unprecedented migration of Andersen's clients that followed Andersen's indictment in March 2002 potentially placed a large burden on successor auditors' audit resources. We refer to this strain, measured at the local-office level, as auditor capacity stress. We examine the effect of auditor capacity stress on investor assessments of audit quali...

We acknowledge with gratitude the comments of Abstract The indictment of Arthur Andersen by the Department of Justice in March 2002 was a major shock to the audit industry. An unprecedented migration of clients from Andersen to other, mostly Big-Four, auditors followed, and potentially placed a large burden on successor auditors' audit resources. W...

The research assesses whether the two Big Eight mergers of 1989 were anticompetitive or efficiency enhancing. The study determines how a merger would affect the merged firm's probability of winning an auction to supply audit services under four different merger theories. A data set of 1,978 firms over a 12-year period is constructed to test these t...

In this article, the author considers the effect of brand names on demand by examining the price ratios of used twin automobiles. Twins usually are made in the same plant and have essentially the same physical attributes but different brand names. If the models of a twin pair are perceived as perfect substitutes, their relative price should equal u...

This research analyzes how consumer experience with a parent brand affects trial and repurchase probabilities for a line extension. We develop and test the “uncertainty hypothesis” which is based on the premise that consumers use experience with the parent brand to infer the quality of the extension. Experience with the parent-brand increases consu...

Slotting allowances are fixed fees paid to retailers by manufacturers in return for stocking new products on a trial basis. While slotting allowances emerged over 10 years ago, there is still no consensus on what purpose the fees serve. This article shows that slotting allowances are consistent with competitive behavior and could have been caused b...

Introducing a new product as a brand extension can both lower the cost of introduction and create a spillover effect that depends on its realized quality level. We show that these two facts along with a model of R&D in the presence of marketing uncertainty, explain the empirical observation that firms introduce brand extensions later than new-name...

This research investigates the antecedents and consequences of customer satisfaction. We develop a model to link explicitly the antecedents and consequences of satisfaction in a utility-oriented framework. We estimate and test the model against alternative hypotheses from the satisfaction literature. In the process, a unique database is analyzed: a...

This paper presents a technique for estimating a firm's brand equity that is based on the financial market value of the firm. Brand equity is defined as the incremental cash flows which accrue to branded products over unbranded products. The estimation technique extracts the value of brand equity from the value of the firm's other assets. This tech...