Vertical Restraints and the Effects of Upstream Horizontal Mergers
THE POLITICAL ECONOMY OF ANTITRUST, Vivek Ghosal and Johann Stennek, eds., North-Holland Publishing, 2006
18 Pages Posted: 21 Jul 2006
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: Suggested Citation