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Empirical Evidence on Vertical Foreclosure

Author

Listed:
  • Rosengren, Eric S
  • Meehan, James W, Jr

Abstract

Recent papers have shown conditions under which vertical mergers can result in anticompetitive foreclosure of unintegrated rivals. One implication of these models is that a necessary condition for anticompetitive foreclosure is that unintegrated rival firms are less profitable after a vertical merger. The authors test this hypothesis by examining the stock prices of unintegrated rivals at the time of a vertical merger announcement and at the time of a government antitrust complaint. They find no evidence to support the foreclosure hypothesis. Copyright 1994 by Oxford University Press.

Suggested Citation

  • Rosengren, Eric S & Meehan, James W, Jr, 1994. "Empirical Evidence on Vertical Foreclosure," Economic Inquiry, Western Economic Association International, vol. 32(2), pages 303-317, April.
    • Handle: RePEc:oup:ecinqu:v:32:y:1994:i:2:p:303-17
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    Cited by:

    1. Marissa Beck & Fiona Scott Morton, 2021. "Evaluating the Evidence on Vertical Mergers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 273-302, September.
    2. Zava Aydemir & Stefan Buehler, 2002. "Estimating Vertical Foreclosure in U.S. Gasoline Supply," SOI - Working Papers 0212, Socioeconomic Institute - University of Zurich.
    3. Stephen R. Blough, 1994. "Yield curve forecasts of inflation: a cautionary tale," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 3-16.
    4. E. Avenel, 2008. "Strategic Vertical Integration Without Foreclosure," Journal of Industrial Economics, Wiley Blackwell, vol. 56(2), pages 247-262, June.
    5. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
    6. Roy, Santanu & Viaene, Jean-Marie, 1998. "On strategic vertical foreign investment," Journal of International Economics, Elsevier, vol. 46(2), pages 253-279, December.
    7. Ali Hortaçsu & Chad Syverson, 2007. "Cementing Relationships: Vertical Integration, Foreclosure, Productivity, and Prices," Journal of Political Economy, University of Chicago Press, vol. 115(2), pages 250-301.
    8. Carson Bays, 2007. "The Determinants of Tying Litigation, 1961–2001," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 13(1), pages 81-96, February.
    9. repec:kap:iaecre:v:13:y:2007:i:1:p:81-96 is not listed on IDEAS
    10. Sanjib Bhuyan, 2002. "Impact of Vertical Mergers on Industry Profitability: An Empirical Evaluation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(1), pages 61-79, February.
    11. Jaideep Shenoy, 2012. "An Examination of the Efficiency, Foreclosure, and Collusion Rationales for Vertical Takeovers," Management Science, INFORMS, vol. 58(8), pages 1482-1501, August.
    12. Bhuyan, Sanjib, 2001. "Impact Of Vertical Mergers On Food Industry Profitability: An Empirical Evaluation," 2001 Annual meeting, August 5-8, Chicago, IL 20469, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Jain, Bharat A. & Kini, Omesh & Shenoy, Jaideep, 2011. "Vertical divestitures through equity carve-outs and spin-offs: A product markets perspective," Journal of Financial Economics, Elsevier, vol. 100(3), pages 594-615, June.
    14. Rakesh Basant & Pulak Mishra, 2019. "Impact of Vertical Integration on Market Power in Indian Manufacturing Sector During the Post-Reform Period," Journal of Industry, Competition and Trade, Springer, vol. 19(4), pages 561-581, December.
    15. Hennessy, David A., 1996. "Information Asymmetry As a Reason for Vertical Integration," Staff General Research Papers Archive 10422, Iowa State University, Department of Economics.
    16. Cooper, James C. & Froeb, Luke M. & O'Brien, Dan & Vita, Michael G., 2005. "Vertical antitrust policy as a problem of inference," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 639-664, September.

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