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Horizontal Mergers For Buyer Power

Author

Listed:
  • Ramón Faulí-Oller

    () (Universidad de Alicante)

  • Lluís Bru Martínez

    () (Universitat de les Illes Balears)

Abstract

Salant et al. (1983) showed in a Cournot setting that horizontal mergers are unprofitable because outsiders react by increasing their output. We show that this negative effect may be compensated by the positive effect that horizontal mergers have on the buyer power of merging firms in input markets.

Suggested Citation

  • Ramón Faulí-Oller & Lluís Bru Martínez, 2003. "Horizontal Mergers For Buyer Power," Working Papers. Serie AD 2003-32, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:2003-32
    as

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    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2003-32.pdf
    File Function: Fisrt version / Primera version, 2003
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    References listed on IDEAS

    as
    1. Stephane Caprice, 2005. "Incentive to encourage downstream competition under bilateral oligopoly," Economics Bulletin, AccessEcon, vol. 12(9), pages 1-5.
    2. Lommerud, Kjell Erik & Straume, Odd Rune & Sorgard, Lars, 2005. "Downstream merger with upstream market power," European Economic Review, Elsevier, vol. 49(3), pages 717-743, April.
    3. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-227, March.
    4. repec:ebl:ecbull:v:12:y:2005:i:9:p:1-5 is not listed on IDEAS
    5. Fauli-Oller, Ramon, 1997. "On merger profitability in a Cournot setting," Economics Letters, Elsevier, vol. 54(1), pages 75-79, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ioannis N. Pinopoulos, 2017. "Upstream horizontal mergers and vertical integration," Discussion Paper Series 2017_07, Department of Economics, University of Macedonia, revised Aug 2017.
    2. repec:kap:jincot:v:18:y:2018:i:1:d:10.1007_s10842-017-0251-6 is not listed on IDEAS
    3. Chrysovalantou Milliou & Joel Sandonis, 2018. "Manufacturer Mergers and Product Variety in Vertically Related Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 1-24, March.
    4. Ramon Fauli-Oller & Joel Sandonis, 2016. "Welfare Effects Of Downstream Mergers And Upstream Market Concentration," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(05), pages 1-16, December.
    5. Zhu, Jing & Boyaci, Tamer & Ray, Saibal, 2016. "Effects of upstream and downstream mergers on supply chain profitability," European Journal of Operational Research, Elsevier, vol. 249(1), pages 131-143.

    More about this item

    Keywords

    buyer power; mergers; input markets.;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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