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Upstream horizontal mergers, bargaining, vertical contracts

Emmanuel Petrakis () and Chrysovalantou Milliou ()

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: Contrary to the seminal paper of Horn and Wolinsky (1988), we demonstrate that upstream firms, which sell their products to competing downstream firms, do not always have incentives to merge horizontally. In particular, we show that when bargaining takes place over two-part tariffs, and not over wholesale prices, upstream firms prefer to act as independent suppliers rather than as a monopolist supplier. Moreover, we show that horizontal mergers can be procompetitive, even in the absence of efficiency gains.

Date: 2005-03
New Economics Papers: this item is included in nep-com, nep-fin and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:we051507

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