Vertical Restraints and the Effects of Upstream Horizontal Mergers
Vanderbilt University - Strategy and Business Economics
Vanderbilt University - Department of Mathematics
Gregory J. Werden
U.S. Department of Justice - Antitrust Division
THE POLITICAL ECONOMY OF ANTITRUST, Vivek Ghosal and Johann Stennek, eds., North-Holland Publishing, 2006
Vanderbilt Law and Economics Research Paper No. 06-13
The downstream effects of mergers between manufacturers of differentiated consumer products are partly determined by the relationship between the merging manufacturers and retailers. That relationship may be such that the retail price effects of the merger are exactly those if the manufacturers sold directly to consumers, and that relationship may be such that the merger produces similar effects with subtle differences, including the possibility of price decreases for non-merging products. Alternatively, that relationship may be such that consumer prices do not change following a merger, which instead shifts profits to the merged firm.
Number of Pages in PDF File: 18
Keywords: vertical restraints, pass-through, mergers, retailing
JEL Classification: L41, L44
Date posted: July 21, 2006
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