On the harm from mergers in input markets

Leonardo J. Basso and Thomas Ross

Economics Letters, 2019, vol. 178, issue C, 70-76

Abstract: This paper examines the additional social harm done by mergers in input markets that lead to higher prices, when those increases are then passed downstream through other distribution stages that are themselves imperfectly competitive. It is shown that measures of deadweight loss coming from simply looking at the (derived) upstream demand curve – as usually done in merger cases – can greatly understate the true deadweight loss generated through the distribution channel. These results have important implications for competition authorities reviewing mergers, particularly when they trade off the harm to competition (added deadweight loss) and merger-generated efficiencies.

Keywords: Mergers; Competition policy; Distribution chains (search for similar items in EconPapers)
JEL-codes: D43 K21 L40 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:178:y:2019:i:c:p:70-76

DOI: 10.1016/j.econlet.2019.02.018

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