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Upstream Merger in a Successive Oligopoly: Who Pays the Price?

Author

Listed:
  • Nilsen, Øivind Anti

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Sørgard, Lars

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Ulsaker, Simen A.

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

This study develops and uses a successive oligopoly model, with an unobservable non-linear tariff between upstream and downstream firms, to analyze the possible anti-competitive effects of an upstream merger. We nd that an upstream merger may lead to higher average prices paid by downstream firms, but that there is no change in the prices paid by consumers. The model is tested empirically on data for an upstream merger in the Norwegian food sector (specifically, the market for eggs). Consistent with the theoretical predictions of the model, we find that the merger had no effect on consumer prices, but led to higher average prices from the downstream to the upstream firm.

Suggested Citation

  • Nilsen, Øivind Anti & Sørgard, Lars & Ulsaker, Simen A., 2013. "Upstream Merger in a Successive Oligopoly: Who Pays the Price?," Discussion Paper Series in Economics 17/2013, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2013_017
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    References listed on IDEAS

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    Cited by:

    1. Rey, Patrick & Verge, T., 2016. "Secret contracting in multilateral relations," TSE Working Papers 16-744, Toulouse School of Economics (TSE), revised Dec 2020.

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    More about this item

    Keywords

    Upstream merger; non-linear prices; Vertical con- tracts.;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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