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Manufacturer Mergers and Product Variety in Vertically Related Markets

Chrysovalantou Milliou () and Joel Sandonis ()
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Joel Sandonis: University of Alicante

Journal of Industry, Competition and Trade, 2018, vol. 18, issue 1, 1-24

Abstract: Abstract We study the incentives of final product manufacturers to introduce new products into the market and the impact of a manufacturer merger on them. We show that when manufacturers distribute their products through multi-product retailers, a manufacturer merger, although it leads to an increase in the wholesale prices, it can enhance product variety. The merger induced product variety enhancement though arises only when vertical relations are present: when manufacturers sell directly their products to consumers, a merger never results in more product variety. Still, both with or without vertical relations, a manufacturer merger hurts consumers and decreases welfare.

Keywords: Horizontal mergers; Product variety; Vertical relations (search for similar items in EconPapers)
JEL-codes: L11 L13 L41 L42 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Manufacturers Mergers and Product Variety in Vertically Related Markets (2014) Downloads
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