Upstream Horizontal Mergers, Bargaining and Vertical Contracts
AbstractContrary to the seminal paper of Horn and Wolinsky (1988), we demonstrate that upstream firms, which sell their products to competing downstream firms, do not always have incentives to merge horizontally. In particular, we show that when bargaining takes place over two-part tariffs, and not over wholesale prices, upstream firms prefer to act as independent suppliers rather than as a monopolist supplier. Moreover, we show that horizontal mergers can be procompetitive, even in the absence of efficiency gains.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0509.
Length: 31 pages
Date of creation: 00 Mar 2005
Date of revision:
horizontal mergers; bargaining; vertical relations; two-part tariffs; wholesale;
Find related papers by JEL classification:
- 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
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-18 (All new papers)
- NEP-BEC-2006-11-18 (Business Economics)
- NEP-COM-2006-11-18 (Industrial Competition)
- NEP-IND-2006-11-18 (Industrial Organization)
- NEP-MIC-2006-11-18 (Microeconomics)
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