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Can foreclosure benefit consumers? The case of innovation in new markets

Author

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  • Alexandre Carbonnel

    (NERA Economic Consulting)

Abstract

Innovation concerns have been at the core of some recent horizontal and non-horizontal mergers. This has led to a growing literature that has specifically focused on horizontal mergers. In this paper, I show that foreclosure may benefit consumers in non-horizontal mergers when firms compete to innovate in a new market. This is because it may allow consumers to benefit from an innovation to which they would not have access to in the absence of foreclosure. I determine the conditions leading to this conclusion and argue that a cautious approach to foreclosure by competition authorities is warranted when firms compete to innovate in a new

Suggested Citation

  • Alexandre Carbonnel, 2021. "Can foreclosure benefit consumers? The case of innovation in new markets," Economics Bulletin, AccessEcon, vol. 41(3), pages 1471-1480.
    • Handle: RePEc:ebl:ecbull:eb-21-00871
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I3-P126.pdf
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    References listed on IDEAS

    as
    1. Tasneem Chipty, 2001. "Vertical Integration, Market Foreclosure, and Consumer Welfare in the Cable Television Industry," American Economic Review, American Economic Association, vol. 91(3), pages 428-453, June.
    2. repec:bla:jindec:v:45:y:1997:i:4:p:445-56 is not listed on IDEAS
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    Cited by:

    1. Lefouili, Yassine & Madio, Leonardo, 2023. "Market Structure and Investments : A Progress Report," TSE Working Papers 23-1491, Toulouse School of Economics (TSE), revised Sep 2024.

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    More about this item

    Keywords

    Mergers; foreclosure; innovation;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • K2 - Law and Economics - - Regulation and Business Law

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