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Vertical Integration and Competition Policy

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  • Hackner, Jonas

Abstract

The European Commission has decided to implement a simplified procedure in the context of vertical integration. If the combined market shares of the merging firms is higher than 25 percent the Commission will investigate the merger thoroughly. Otherwise, the merger is considered harmless. The purpose of this study is to examine the welfare aspects of vertical integration in a simple model and investigate the accuracy of the proposed rule of thumb. Mergers turn out to be harmless from a social point of view when the upstream market is relatively less concentrated compared to the downstream market. Copyright 2003 by Kluwer Academic Publishers

Suggested Citation

  • Hackner, Jonas, 2003. "Vertical Integration and Competition Policy," Journal of Regulatory Economics, Springer, vol. 24(2), pages 213-222, September.
  • Handle: RePEc:kap:regeco:v:24:y:2003:i:2:p:213-22
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    References listed on IDEAS

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    1. Riordan, Michael H, 1998. "Anticompetitive Vertical Integration by a Dominant Firm," American Economic Review, American Economic Association, vol. 88(5), pages 1232-1248, December.
    2. Ordover, Janusz A & Saloner, Garth & Salop, Steven C, 1990. "Equilibrium Vertical Foreclosure," American Economic Review, American Economic Association, vol. 80(1), pages 127-142, March.
    3. Hart, O. & Tirole, J., 1990. "Vertical Integration And Market Foreclosure," Working papers 548, Massachusetts Institute of Technology (MIT), Department of Economics.
    4. Hackner, Jonas, 2000. "A Note on Price and Quantity Competition in Differentiated Oligopolies," Journal of Economic Theory, Elsevier, vol. 93(2), pages 233-239, August.
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    Cited by:

    1. repec:eee:indorg:v:55:y:2017:i:c:p:25-57 is not listed on IDEAS
    2. Etro, Federico, 2011. "Endogenous market structures and contract theory: Delegation, principal-agent contracts, screening, franchising and tying," European Economic Review, Elsevier, vol. 55(4), pages 463-479, May.
    3. Jochen Manegold, 2016. "Stackelberg Competition among Intermediaries in a Differentiated Duopoly with Product Innovation," Working Papers CIE 98, Paderborn University, CIE Center for International Economics.
    4. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, March.
    5. Arijit Mukherjee & Piercarlo Zanchettin, 2012. "Vertical integration and product differentiation," Discussion Papers in Economics 12/17, Department of Economics, University of Leicester, revised Sep 2012.
    6. Ricardo Biscaia & Paula Sarmento, 2013. "Location Decisions in a Natural Resource Model of Cournot Competition," FEP Working Papers 509, Universidade do Porto, Faculdade de Economia do Porto.
    7. Gelves, J. Alejandro & Heywood, John S., 2016. "Pre-emptive mergers and downstream cost asymmetry," Economics Letters, Elsevier, vol. 147(C), pages 23-26.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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