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Bargaining, Mergers, and Technology Choice in Bilaterally Oligopolistic Industries

  • Roman Inderst
  • Christian Wey

This paper provides a conceptual framework of multilateral bargaining in a bilaterally oligopolistic industry to analyze the motivations for horizontal mergers, technology choice, and their welfare implications. We first analyze the implication of market structure for the distribution of industry profits. We find that retailer mergers are more likely (less likely) if suppliers have increasing (decreasing) unit costs, while supplier mergers are more likely (less likely) if goods are substitutes (complements). In a second step we explore how market structure affects suppliers' technology choice, which reflects a trade-off between inframarginal and marginal production costs. We find that suppliers focus more on marginal cost reduction if (i) retailers are integrated and (ii) suppliers are non-integrated. In a final step we consider the whole picture where both market structure and (subsequent) technology choice are endogenous. Analyzing the equilibrium market structure, we find cases where retailers become integrated to induce suppliers to choose a more efficient technology, even though integration weakens their bargaining position. In this case the merger benefits all parties, i.e., suppliers, retailers, and even consumers. However, we also show that the equilibrium market structure does often not maximize welfare. ZUSAMMENFASSUNG - (Verhandlungen, Fusionen und Technologiewahl in bilateralen Oligopolen) Diese Arbeit entwickelt einen Modellrahmen für multilaterale Verhandlungen in bilateralen Oligopolen, um die Fusions- und Technologiewahlanreize der Unternehmen sowie deren Wohlfahrtswirkungen zu untersuchen. Der wichtigste Anwendungsbereich des Modells sind die Firmenbeziehungen zwischen Einzelhandelsketten und Herstellerfirmen. Beide Handelsstufen sind weder vollkommen monopolisiert noch perfekt fragmentiert. Vielmehr stehen auf jeder Handelsstufe wenige "große" Firmen miteinander in Konkurrenz. Die Geschäftbeziehungen zwischen Herstellern und Einzelhandel sind zu dem multilateral angelegt, so dass ein Hersteller seine Produkte typischerweise an mehrere Einzelhandelsketten verkauft und Unternehmen des Einzelhandels mehrere Herstellermarken anbieten. Der Aufsatz analysiert zuerst, wie die Marktstruktur die Verteilung der Industrieprofite zwischen den Firmen bestimmt, woraus sich eindeutige Bedingungen für profitable Zusammenschlüsse ableiten lassen: Firmen des Einzelhandels stellen sich durch einen Zusammenschluss besser (schlechter), wenn die Herstellerfirmen mit steigenden (fallenden) Durchschnittskosten produzieren. Herstellerfirmen profitieren durch einen Zusammenschluss, wenn sie substituierbare Güter anbieten, während sie sich durch eine Fusion schlechter stellen, wenn sie komplementäre Güter absetzen. Der nächste Schritt der Untersuchung erkundet die Wirkungen der Marktstruktur auf die Technologiewahlanreize der Hersteller, wobei die Adaption einer neuen Technologie einerseits mit niedrigeren marginalen Kosten und andererseits mit höheren inframarginalen (oder Fix-) Kosten einhergeht. Es zeigt sich, daß Herstellerfirmen höhere Anreize zur Senkung ihrer marginalen Kosten haben, wenn (i) der Einzelhandel vollständig monopolisiert ist und (ii) die Herstellerfirmen nicht integriert sind. Die Untersuchung stellt damit die aktuellen Konzentrationsprozesse im Einzelhandel in ein neues Licht. Zusammenschlüsse zwischen Einzelhändlern führen dazu, dass Hersteller einen relativ höheren Anteil ihrer marginalen Kosten tragen müssen, was wiederum die Anreizen zur Verringerung derselben vergrößert. Dieses Ergebnis steht in einem scharfen Gegensatz zu der häufig geäußerten Hypothese, dass "mächtige" Einzelhandelsketten die Gewinne der Herstellerfirmen schmälern und folglich die Innovationstätigkeit im Produktionssektor nachhaltig beeinträchtigen. In dem letzen Schritt der Untersuchung werden die Marktstruktur und die nachfolgende Technologiewahl der Herstellerfirmen endogen bestimmt. Die Analyse der gleichgewichtigen Marktstruktur bei endogener Technologiewahl fördert die Möglichkeit "strategischer Fusionen" zwischen Einzelhandelsfirmen zu Tage. In diesem Fall schließen sich zwei Einzelhändler zusammen, um die Herstellerfirmen zur Wahl der effizienten Technologie zu bewegen, obwohl die Einzelhändler durch die Fusion ihre Verhandlungsposition gegenüber den Herstellern schwächen. Interessanterweise stellen sich durch "strategische Einzelhandelsfusionen" alle Marktpartizipanten besser: die Hersteller, der Einzelhandel und die Konsumenten. Es zeigt sich allerdings auch, dass die endogen bestimmte Marktstruktur nicht immer die Wohlfahrt maximiert.

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Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 01-19.

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Length: 47 pages
Date of creation: Nov 2001
Date of revision:
Publication status: Published in RAND Journal of Economics , Vol. 34(1), 2003, pp. 1-19.
Handle: RePEc:wzb:wzebiv:fsiv01-19
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