22 Pages Posted: 17 Mar 2010
Date Written: March 2010
In a repeated game setting of a vertically related industry, we study the collusive effects of vertical mergers. We show that any vertical merger facilitates upstream collusion, no matter how large (in terms of capacity or size of product portfolio) the integrated downstream buyer. But a vertical merger with a larger buyer helps more to facilitate upstream collusion than a similar merger with a smaller buyer. This formalizes the idea expressed in the U.S. and EU non-horizontal merger guidelines that some downstream buyers may be more "disruptive" of collusive schemes than others.
Keywords: antitrust, collusion, merger guidelines, vertical integration, vertical merger
JEL Classification: L13, L40
Suggested Citation: Suggested Citation
Nocke, Volker and White, Lucy, Vertical Merger, Collusion, and Disruptive Buyers (March 2010). CEPR Discussion Paper No. DP7722. Available at SSRN: https://ssrn.com/abstract=1573426
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