Economics at your fingertips  

Conglomerate Mergers: Vertical Mergers in Disguise?

Tommy Gabrielsen ()

International Journal of the Economics of Business, 2003, vol. 10, issue 1, 1-16

Abstract: The article offers a complementary theory for conglomerate mergers. The central argument is that a conglomerate merger may be a vertical merger in disguise. The acquisition of a non-competing firm takes place to achieve control over the target's distribution channel that otherwise could be used by rival entrants. The analysis shows that an entrant with a very differentiated product is accommodated, and an entrant with a close substitute is foreclosed through a conglomerate merger. There also exist equilibria with partial foreclosure where the entrant is forced onto less efficient distribution channels. Incumbent firms' mergers to achieve foreclosure is socially wasteful.

Keywords: Conglomerate Mergers; Distribution Channels; Foreclosure (search for similar items in EconPapers)
Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

DOI: 10.1080/1357151032000043294

Access Statistics for this article

International Journal of the Economics of Business is currently edited by Eleanor Morgan

More articles in International Journal of the Economics of Business from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

Page updated 2020-10-31
Handle: RePEc:taf:ijecbs:v:10:y:2003:i:1:p:1-16