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Diagnosing Anticompetitive Effects of Vertical Integration by Multiproduct Firms

Author

Listed:
  • Fernando Luco

    (Texas A&M University)

  • Guillermo Marshall

    (University of British Columbia)

Abstract

The 2020 Vertical Merger Guidelines assume that the elimination of double marginalization caused by vertical integration is procompetitive. A body of research shows that this assumption may fail to hold in multiproduct industries. In this paper, we present a model of a vertical supply chain to analyze equilibrium effects of vertical integration, which we use to shed light on when an elimination of double marginalization may fail to be procompetitive in multiproduct industries. In particular, we discuss diversion ratios as a tool for diagnosing anticompetitive effects.

Suggested Citation

  • Fernando Luco & Guillermo Marshall, 2021. "Diagnosing Anticompetitive Effects of Vertical Integration by Multiproduct Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 381-392, September.
    • Handle: RePEc:kap:revind:v:59:y:2021:i:2:d:10.1007_s11151-021-09823-0
    DOI: 10.1007/s11151-021-09823-0
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    References listed on IDEAS

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    Cited by:

    1. Donna, Javier D. & Pereira, Pedro & Trindade, Andre & Yoshida, Renan C., 2020. "Direct-to-Consumer Sales by Manufacturers and Bargaining," MPRA Paper 105773, University Library of Munich, Germany.

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