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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- Chrysovalantou Milliou & Emmanuel Petrakis, 2005. "Upstream Horizontal Mergers, Bargaining, Vertical Contracts," Economics Working Papers we051507, Universidad Carlos III, Departamento de Economía.
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