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Upstream Horizontal Mergers and Efficiency Gains

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Author Info
Chrysovalantou Milliou ()
Apostolis Pavlou ()

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Abstract

We study upstream horizontal mergers and their potential efficiency gains. We show that an upstream horizontal merger can give rise to two efficiency-enhancing effects when firms trade through two-part tariffs. It increases R&D investments and decreases wholesale prices when downstream competition is not too strong. Examining whether the merger’s potential efficiency gains can overcome its anti-competitive effects in terms of welfare, we show that when firms merge usually both of the above mentioned efficiencies are realized and they are passed on to consumers. This holds to a lesser extend when firms trade through linear contracts.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2748.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2748

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Related research
Keywords: horizontal mergers; vertical relations; efficiency gains; two-part tariffs; merger policy;

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Find related papers by JEL classification:
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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  1. Bruno S. Frey & Paolo Pamini, 2009. "Making world heritage truly global: the culture certificate scheme," IEW - Working Papers iewwp419, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  2. Volker Nitsch, 2009. "Fly or Cry: Is Airport Noise Costly?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  3. Felix Bierbrauer, 2009. "Optimal Income Taxation and Public Goods Provision in a Large Economy with Aggregate Uncertainty," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  5. Reuben Ernesto & Riedl Arno, 2009. "Enforcement of Contribution Norms in Public Good Games with Heterogeneous Populations," Research Memoranda 031, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
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  6. Peter Egger & Christian Keuschnigg & Hannes Winner, 2009. "Incorporation and Taxation: Theory and Firm-level Evidence," Working Papers 0908, Oxford University Centre for Business Taxation. [Downloadable!]
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  7. Kirsten Wandschneider & Nikolaus Wolf, 2009. "Shooting on a Moving Target: Eyplaining European Bank Rates during the Interwar Period," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  9. Sebastian Gechert, 2009. "Supplementary Private Health Insurance in Selected Countries: Lessons for EU Governments?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  10. repec:cpr:ceprdp:7379 is not listed on IDEAS
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  14. Chrysovalantou Milliou & Apostolis Pavlou, 2009. "Upstream Horizontal Mergers and Efficiency Gains," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  15. Bruno S. Frey, 2009. "A multiplicity of approaches to institutional analysis. Applications to the government and the arts," IEW - Working Papers iewwp420, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  16. Katri Kosonen & Gaetan Nicodeme, 2009. "The role of fiscal instruments in environmental policy," Taxation Papers 19, Directorate General Taxation and Customs Union, European Commission. [Downloadable!]
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  17. Subhasish M. Chowdhury & Dan Kovenock J. & Roman M. Sheremeta, 2009. "An Experimental Investigation of Colonel Blotto Games," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  18. Michael Funke & Marc Gronwald, 2009. "A Convex Hull Approach to Counterfactual Analysis of Trade Openness and Growth," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  19. Francesco Cinnirella & Joachim Winter, 2009. "Size Matters! Body Height and Labor Market Discrimination: A Cross-European Analysis," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  20. Thushyanthan Baskaran & Lars P. Feld, 2009. "Fiscal Decentralization and Economic Growth in OECD Countries: Is there a Relationship?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  21. Kurt Schmidheiny & Marius Brülhart, 2009. "On the Equivalence of Location Choice Models: Conditional Logit, Nested Logit and Poisson," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  22. Danziger, Leif, 2009. "Endogenous Monopsony and the Perverse Effect of the Minimum Wage in Small Firms," IZA Discussion Papers 4320, Institute for the Study of Labor (IZA). [Downloadable!]
  23. Ben J. Heijdra & Jochen O. Mierau, 2009. "Annuity Market Imperfection, Retirement and Economic Growth," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  25. Caterina Liesegang & Marco Runkel, 2009. "Corporate Income Taxation of Multinationals and Fiscal Equalization," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  26. Lars P. Feld & Christoph A. Schaltegger, 2009. "Political Stability and Fiscal Policy - Time Series Evidence for the Swiss Federal Level since 1849," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  27. Marc Gronwald, 2009. "Investigating the U.S. Oil-Macroeconomy Nexus using Rolling Impulse Responses," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  28. Ali Bayar & Bram Smeets, 2009. "Government Deficits in the European Union: An Analysis of Entry and Exit Dynamics," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  29. Hans Fehr, 2009. "Pension Funding and Individual Accounts in Economies with Life-cyclers and Myopes," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  30. Gary Burtless, 2009. "Lessons of the Financial Crisis for the Design of National Pension Systems," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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This page was last updated on 2009-11-3.


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