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Anticompetitive Vertical Merger Waves

Johan Hombert, Jerome Pouyet and Nicolas Schutz ()

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We develop a model of vertical merger waves leading to input foreclosure. When all upstream firms become vertically integrated, the input price can increase substantially above marginal cost despite Bertrand competition in the input market. Input foreclosure is easiest to sustain when upstream market shares are the most asymmetric (monopoly-like equilibria) or the most symmetric (collusive-like equilibria). In addition, these equilibria are more likely when (i) mergers generate strong synergies; (ii) price discrimination in the input market is not allowed; (iii) contracts are public; whereas (iv) the impact of upstream and downstream industry concentration is ambiguous.

New Economics Papers: this item is included in nep-com and nep-ind
Date: 2013-09-25
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https://epub.ub.uni-muenchen.de/17399/1/440.pdf (application/pdf)

Related works:
Working Paper: Anticompetitive Vertical Merger Waves (2019) Downloads
Working Paper: Anticompetitive Vertical Merger Waves (2019) Downloads
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