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Downstream merger and welfare in a bilateral oligopoly

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  • Symeonidis, George

Abstract

I analyse the effects of a downstream merger in a differentiated oligopoly when there is bargaining between downstream firms and upstream agents (firms or unions). Bargaining outcomes can be observable or unobservable by rivals. When competition is in quantities, upstream agents are independent and bargaining is over a uniform input price, a merger between downstream firms may raise consumer surplus and overall welfare. However, when competition is in prices or the upstream agents are not independent or bargaining is over a two-part tariff or bargaining covers both the input price and the level of output, the standard welfare results are restored: a downstream merger always reduces consumer surplus and overall welfare.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 28 (2010)
Issue (Month): 3 (May)
Pages: 230-243

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Handle: RePEc:eee:indorg:v:28:y:2010:i:3:p:230-243

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Web page: http://www.elsevier.com/locate/inca/505551

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Keywords: Mergers Bargaining Bilateral oligopoly Welfare;

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References

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Citations

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Cited by:
  1. Arup Bose & Barnali Gupta, 2013. "Mixed markets in bilateral monopoly," Journal of Economics, Springer, vol. 110(2), pages 141-164, October.
  2. Juan Carlos Bárcena-Ruiz, 2011. "Production externality and productivity of labor," Hacienda Pública Española, IEF, vol. 196(1), pages 65-78, january.
  3. Nicola Meccheri & Luciano Fanti, 2012. "Managerial Delegation Schemes in a Duopoly with Endogenous Production Costs: A Comparison of Sales and Relative Profit Delegation under Centralised Unionisation," Working Paper Series 44_12, The Rimini Centre for Economic Analysis.
  4. Luciano Fanti & Nicola Meccheri, 2012. "Price competition, merger and welfare under firm-specific unions: on the role of unions’ preference towards wages," Discussion Papers 2012/136, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  5. Luciano Fanti & Nicola Meccheri, 2012. "Differentiated duopoly and horizontal merger profitability under monopoly central union and convex costs," Discussion Papers 2012/134, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  6. Luciano Fanti & Nicola Meccheri, 2013. "Managerial Delegation under Alternative Unionization Structures," LABOUR, CEIS, vol. 27(1), pages 38-57, 03.
  7. Luciano Fanti & Nicola Meccheri, 2014. "Capacity Choice and Welfare under Alternative Unionisation Structures," Working Paper Series 12_14, The Rimini Centre for Economic Analysis.
  8. Luciano Fanti & Nicola Meccheri, 2012. "Profits and Competition in a Unionized Duopoly Model with Product Differentiation and Labour Decreasing Returns," Working Paper Series 06_12, The Rimini Centre for Economic Analysis.
  9. Luciano Fanti & Nicola Meccheri, 2012. "Merger results under price competition and plant-specific unions," Discussion Papers 2012/135, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  10. Luciano Fanti & Nicola Meccheri, 2013. "Non-rigid wages and merger profitability reversal under convex costs and centralised unionisation," Discussion Papers 2013/167, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

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