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Upstream merger in a successive oligopoly: Who pays the price?

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  • Nilsen, Øivind Anti
  • Sørgard, Lars
  • Ulsaker, Simen A.

Abstract

This study applies 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 in the Norwegian food sector (specifically, the market for eggs). The theoretical predictions are that an upstream merger may lead to higher average prices paid by downstream firms and at the same time no changes in the prices paid by consumers. Consistent with the theoretical predictions it is found that the merger had no effect on consumer prices, but led to higher average prices paid by the downstream firms to the merged firm.

Suggested Citation

  • Nilsen, Øivind Anti & Sørgard, Lars & Ulsaker, Simen A., 2016. "Upstream merger in a successive oligopoly: Who pays the price?," International Journal of Industrial Organization, Elsevier, vol. 48(C), pages 143-172.
    • Handle: RePEc:eee:indorg:v:48:y:2016:i:c:p:143-172
    DOI: 10.1016/j.ijindorg.2016.06.003
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    Cited by:

    1. Rey, Patrick & Vergé, Thibaud, 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 contracts;
    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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