Diagonal mergers and foreclosure in the internet

Emanuele Giovanetti

No 80, Working Papers in Public Economics from Department of Economics and Law, Sapienza University of Roma

Abstract: We study the incentives for a ''diagonal'' merger between two Internet Service Providers, one a wireless retail only ISP in two origination markets, and the second a vertically integrated wired retailer in one market and an upstream provider in the other. The merger’s effects depend on differentiation in access modalities; only with high differentiation does the merger have positive welfare effects. We focus on post-merger foreclosure, which, when it happens, only takes place in the market where the merger is horizontal and not where the merger is vertical. The Network architecture used is meant to capture Internet routing.

Keywords: Mergers; Internet; Foreclosure; Network Industries. (search for similar items in EconPapers)
JEL-codes: L13 L86 L96 (search for similar items in EconPapers)
Pages: 34
Date: 2005-06
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