Vertical Mergers and Acquisitions

Richard S. Markovits ()
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Richard S. Markovits: The University of Texas at Austin

Chapter Chapter 14 in Welfare Economics and Antitrust Policy — Vol. II, 2022, pp 243-253 from Springer

Abstract: Abstract This chapter focuses on vertical (M&A)s. This chapter points out that, in addition to the functions that horizontal (M&A)s can perform for their participants, vertical (M&A)s can increase their participants’ profits by creating a resulting firm that can take advantage of continuous-flow economies, that is better-placed to conceal violations of price regulations that apply to one participant’s pricing, and that can substitute hierarchical policies that control its own employees for the surrogates-for-vertical-integration contractual provisions and sales-policies it would have used as a non-vertically-integrated firm to control independent contractors. This chapter also explains why vertically-integrated firms are unlikely to make inherently-unprofitable decisions not to sell to or buy from independents.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-96482-5_14

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DOI: 10.1007/978-3-030-96482-5_14

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