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A General Model to Assess Unilateral Price Effects of Horizontal Mergers with Vertical Relations

15 Pages Posted: 16 Nov 2017  

Harald Bergh

Oslo Economics

Arne Gramstad

Oslo Economics

Jostein Skaar

Oslo Economics

Date Written: November 14, 2017

Abstract

Horizontal mergers sometimes involve changes in vertical relations between merging firms as well as between merging and non-merging firms. Vertically integrated non-merging firms may for instance lose sales to independent downstream firms if a downstream firm is acquired by another vertically integrated firm. Thus, the price response from outside firms could go in the opposite direction of that of the merging parties. Consequently, estimates of unilateral price effects are incorrect if these structural changes are not accounted for. We extend the standard framework of unilateral price effects with linear demand to account for any change in vertical ties between firms following a merger in an n product market.

Keywords: Merger Analysis, Antitrust, Unilateral Effects, Vertical Restrictions

JEL Classification: L11, L13, L42

Suggested Citation

Bergh, Harald and Gramstad, Arne and Skaar, Jostein, A General Model to Assess Unilateral Price Effects of Horizontal Mergers with Vertical Relations (November 14, 2017). Available at SSRN: https://ssrn.com/abstract=3070890 or http://dx.doi.org/10.2139/ssrn.3070890

Harald Bergh

Oslo Economics ( email )

Kronprinsesse Märthas plass 1
Oslo, 0160
Norway

Arne Gramstad (Contact Author)

Oslo Economics ( email )

Kronprinsesse Märthas plass 1
Oslo, 0160
Norway

Jostein Skaar

Oslo Economics ( email )

Kronprinsesse Märthas plass 1
Oslo, 0160
Norway

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