Mandatory Upstream Inputs and Upward Pricing Pressure: Implications for Competition Policy☆

Timothy Tardiff and Dennis L. Weisman

A chapter in Healthcare Antitrust, Settlements, and the Federal Trade Commission, 2018, vol. 28, pp 401-421 from Emerald Group Publishing Limited

Abstract: The competition and regulatory economics literature has developed indicators that detect whether a vertically integrated provider (VIP) is engaging in market exclusion in the form of an anticompetitive price squeeze and non-price discrimination leading to sabotage of downstream competitors. Weisman integrates these indicators by developing a safe-harbor range within which a profit-maximizing VIP engages in neither form of market exclusion. Downstream retail competition that depends on the VIP’s inputs imposes upward pricing pressure on the downstream prices, with the amount of such pressure increasing as the downstream products become more homogeneous (closer substitutes). We analyze the implications of upward pricing pressure for antitrust evaluations of a duty to deal, regulatory policies mandating wholesale inputs for entrants, and vertical mergers. We find, for example, no basis to oppose a merger in which the VIP was previously required to supply inputs to rivals at unregulated prices.

Keywords: Vertical integration; exclusionary behavior; duty to deal; competition policy; mergers; antitrust; L4; L51; L96 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... 3-589520180000028008
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)

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: https://EconPapers.repec.org/RePEc:eme:rlwezz:s0193-589520180000028008

DOI: 10.1108/S0193-589520180000028008

Access Statistics for this chapter

More chapters in Research in Law and Economics from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().