Template-Type: ReDIF-Paper 1.0
Title: Anticompetitive Vertical Merger Waves
Author-Name: Johan Hombert
Author-Email: hombert@hec.fr
Author-Name: Jérôme Pouyet
Author-Email: pouyet@essec.edu
Author-Name: Nicolas Schutz
Author-Email: schutz@uni-mannheim.de
Classification-JEL: L13
Keywords: vertical mergers, vertical foreclosure, merger waves, merger policy

Abstract: We develop a model of vertical merger waves and use it to study the optimal merger
policy. As a merger wave can result in partial foreclosure, it can be optimal to ban a
vertical merger that eliminates the last unintegrated upstream firm. Such a merger is
more likely to worsen market performance when the number of downstream firms is
large relative to the number of upstream firms, and when upstream contracts are nondiscriminatory, linear, and public. On the other hand, the optimal merger policy can
be non-monotonic in the strength of synergies or in the degree of downstream product
differentiation.

Note: 
Length: 32
Creation-Date: 2019-04
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp084
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2019_084