Analyzing Vertical Mergers with Auctions Upstream

Economic Analysis Group Discussion Paper 21-4

36 Pages Posted: 9 Jun 2022

See all articles by Joseph Podwol

Joseph Podwol

Antitrust Division, U.S. Department of Justice

Alexander Raskovich

George Mason University - Antonin Scalia Law School, Faculty

Date Written: December 15, 2021

Abstract

We develop a model of vertical mergers with open auctions upstream. This setting may be appropriate for industries where inputs are procured via auction-like “requests for proposal.” For example, Drennan et al (2020) reports that a model of this type was used during the CVS-Aetna merger investigation. Our approach contrasts with a growing body of work on vertical mergers where input prices are determined through Nash bargaining. We discuss how the vertical merger effects of raising rivals’ costs and eliminating double markup might be quantified in our particular model.

Keywords: vertical mergers, merger simulation, auctions, antitrust, competition

JEL Classification: C7, D0, D4, L0, L2, L4

Suggested Citation

Podwol, Joseph and Raskovich, Alexander, Analyzing Vertical Mergers with Auctions Upstream (December 15, 2021). Economic Analysis Group Discussion Paper 21-4, Available at SSRN: https://ssrn.com/abstract=4125504 or http://dx.doi.org/10.2139/ssrn.4125504

Joseph Podwol

Antitrust Division, U.S. Department of Justice ( email )

202-598-2866 (Phone)

Alexander Raskovich (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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