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Vertical Restraints and the Effects of Upstream Horizontal Mergers

THE POLITICAL ECONOMY OF ANTITRUST, Vivek Ghosal and Johann Stennek, eds., North-Holland Publishing, 2006

Vanderbilt Law and Economics Research Paper No. 06-13

18 Pages Posted: 21 Jul 2006  

Luke Froeb

Vanderbilt University - Strategy and Business Economics

Steven Tschantz

Vanderbilt University - Department of Mathematics

Gregory J. Werden

U.S. Department of Justice - Antitrust Division

Abstract

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.

Keywords: vertical restraints, pass-through, mergers, retailing

JEL Classification: L41, L44

Suggested Citation

Froeb, Luke and Tschantz, Steven and Werden, Gregory J., Vertical Restraints and the Effects of Upstream Horizontal Mergers. THE POLITICAL ECONOMY OF ANTITRUST, Vivek Ghosal and Johann Stennek, eds., North-Holland Publishing, 2006; Vanderbilt Law and Economics Research Paper No. 06-13. Available at SSRN: https://ssrn.com/abstract=917897

Luke M. Froeb (Contact Author)

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

Steven T. Tschantz

Vanderbilt University - Department of Mathematics ( email )

Nashville, TN 37240
United States

Gregory J. Werden

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

450 Fifth Street, NW
9th Floor
Washington, DC 20530
United States
202-307-6366 (Phone)

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