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Endogenous Merger Waves in Vertically Related Industries

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Abstract

We study merger waves in vertically related industries where firms can engage in both vertical and horizontal mergers. Even though any individual merger would have been profitable, firms may refrain from merging for fear of negative impacts from other mergers. When they do merge, however, they always merge in waves, which is either vertical or horizontal depending on the relative intensity of double markup and horizontal competitions in the two industries. Finally, merger waves may happen with or without any fundamental change in the underlying economic conditions.

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  • Zhiyong Yao & Wen Zhou, 2011. "Endogenous Merger Waves in Vertically Related Industries," Working Papers 11-34, NET Institute.
    • Handle: RePEc:net:wpaper:1134
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    More about this item

    Keywords

    merger wave; horizontal mergers; vertical mergers; stable market structure;
    All these keywords.

    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
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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