Anticompetitive Vertical Merger Waves
We develop a model of vertical merger waves and use it to study the optimal merger policy. As a merger wave can result in partial foreclosure, it can be optimal to ban a vertical merger that eliminates the last unintegrated upstream firm. Such a merger is more likely to worsen market performance whe...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Blackwell Publishing Ltd
2019
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| Online Access: | View Fulltext in Publisher |
| Summary: | We develop a model of vertical merger waves and use it to study the optimal merger policy. As a merger wave can result in partial foreclosure, it can be optimal to ban a vertical merger that eliminates the last unintegrated upstream firm. Such a merger is more likely to worsen market performance when the number of downstream firms is large relative to the number of upstream firms, and when upstream contracts are non-discriminatory, linear and public. On the other hand, the optimal merger policy can be non-monotonic in the strength of synergies or in the degree of downstream product differentiation. © 2020 The Editorial Board of The Journal of Industrial Economics and John Wiley & Sons Ltd |
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| ISBN: | 00221821 (ISSN) |
| DOI: | 10.1111/joie.12204 |