Unilateral Price Effects and Vertical Relations Between Merging and Non-merging Firms

Review of Industrial Organization (2020), Vol. 57, pp. 131–143

17 Pages Posted: 16 Nov 2017 Last revised: 12 Aug 2020

Date Written: September 15, 2019

Abstract

Mergers sometimes affect vertical relations between merging and non-merging firms. Vertically integrated non-merging firms may, for instance, lose its input sales to a downstream rival if the downstream rival merges with another vertically integrated firm. Thus, price responses from non-merging firms could go in the opposite direction to those of the merging parties. Consequently, estimates of unilateral price effects that do not account for these structural changes are incorrect. We extend the standard framework of unilateral price effects of horizontal mergers with linear demand to account for changes in vertical relations between merging and non-merging firms.

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

JEL Classification: L11, L13, L42

Suggested Citation

Bergh, Harald and Gramstad, Arne and Skaar, Jostein, Unilateral Price Effects and Vertical Relations Between Merging and Non-merging Firms (September 15, 2019). Review of Industrial Organization (2020), Vol. 57, pp. 131–143, 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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