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Manufacturers Mergers and Product Variety in Vertically Related Markets

Chrysovalantou Milliou () and Joel Sandonis

No 4932, CESifo Working Paper Series from CESifo

Abstract: We study final product manufacturers’ incentives to introduce new products into the market and how they are affected by a merger among them. We show that when manufacturers distribute their products through multi-product retailers, a manufacturers merger, although it leads to an increase in the wholesale prices, it can enhance product variety. The merger generated product variety efficiencies though arise only when vertical relations are present: when manufacturers sell directly their products to consumers, a merger never results into more product variety. Still, both in the presence and in the absence of vertical relations, a manufacturers merger is harmful to consumers and 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: 2014
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Journal Article: Manufacturer Mergers and Product Variety in Vertically Related Markets (2018) Downloads
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