Empirical evidence on vertical foreclosure
AbstractRecent papers have shown conditions under which vertical, mergers can result in anticompetitive foreclosure of unintegrated rivals. These models imply that a necessary but not sufficient condition for anticompetitive foreclosure is that unintegrated rivals are less profitable after a vertical merger. We test this hypothesis by examining the stock prices of unintegrated rivals at the time of a vertical merger announcement and at the time of a government antitrust complaint. We find no evidence to support the foreclosure hypothesis.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Boston in its series Working Papers with number 93-4.
Date of creation: 1993
Date of revision:
Publication status: Published in Economic Inquiry 32, no. 2 (April 1994): 303-17.
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