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On Vertical Mergers and Their Competitive Effects Author info | Abstract | Publisher info | Download info | Related research | Statistics Chen, Yongmin
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It is well known that vertical integration cats change the pricing incentive of an upstream producer. However, it has not been noticed that vertical integration may also change the pricing incentive of downstream producer and the incentive of a competitor in choosing input suppliers. I develop an equilibrium theory of vertical merger that incorporates these additional strategic considerations. Under fairly general conditions, a vertical merger will result in both efficiency gains and a collusive effect. The competitive effects of a vertical merger depend on the cost of switching suppliers and the degree of downstream product differentiation. Copyright 2001 by the RAND Corporation.
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Article provided by The RAND Corporation in its journal RAND Journal of Economics .
Volume (Year): 32 (2001)
Issue (Month): 4 (Winter)
Pages: 667-85
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Handle: RePEc:rje:randje:v:32:y:2001:i:4:p:667-85Contact details of provider: Web page: http://www.rje.org
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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