Vertical Merger, Collusion, and Disruptive Buyers

Volker Nocke and Lucy White

No 7722, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In a repeated game setting of a vertically related industry, we study the collusive effects of vertical mergers. We show that any vertical merger facilitates upstream collusion, no matter how large (in terms of capacity or size of product portfolio) the integrated downstream buyer. But a vertical merger with a larger buyer helps more to facilitate upstream collusion than a similar merger with a smaller buyer. This formalizes the idea expressed in the U.S. and EU non-horizontal merger guidelines that some downstream buyers may be more "disruptive" of collusive schemes than others.

Keywords: Vertical merger; Vertical integration; Collusion; Merger guidelines; Antitrust (search for similar items in EconPapers)
JEL-codes: L13 L40 (search for similar items in EconPapers)
Date: 2010-03
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Citations: View citations in EconPapers (14)

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