Unilateral Effects of Horizontal Mergers with Vertical Relations Between Firms and Other Structural Market Changes

Magne K. Asphjell (), Harald N. Bergh (), Tyra Merker () and Jostein Skaar ()
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Magne K. Asphjell: Oslo Economics
Harald N. Bergh: Oslo Economics
Tyra Merker: Oslo Economics
Jostein Skaar: Oslo Economics

Review of Industrial Organization, 2017, vol. 51, issue 3, No 6, 394 pages

Abstract: Abstract If one firm buys inputs from a competitor, the input price may be used to internalize the competition between the firms. Thus, positive unilateral pricing effects may arise if one firm starts to buy inputs from a competitor. Conversely, unilateral pricing effects may be small if two firms with vertical relations merge, as pre-merger competition is partly internalized through the input price. We present a method for adjusting the formula of Hausman et al. (Econ Lett 111(2):119–121, 2011), in order to predict correct unilateral pricing effects not only for horizontal mergers, but also for structural changes in markets where one firm sells inputs to a rival.

Keywords: Merger analysis; Unilateral effects; Vertical restrictions (search for similar items in EconPapers)
JEL-codes: L42 L44 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11151-017-9566-z

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