Upstream Horizontal Mergers, Bargaining, 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 Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we051507.
Date of creation: Mar 2005
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-03-20 (All new papers)
- NEP-COM-2005-03-20 (Industrial Competition)
- NEP-FIN-2005-03-20 (Finance)
- NEP-MIC-2005-03-20 (Microeconomics)
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