Upstream mergers, downstream mergers, and secret vertical contracts
نویسندگان
چکیده
منابع مشابه
Upstream mergers, downstream mergers, and secret vertical contracts
In an industry characterised by secret vertical contracts, we consider a benchmark case where two vertical chains exist, with two upstream manufacturers selling to two downstream retailers, and show that the equilibrium prices are independent of whether upstream or downstream ̄rms have all the bargaining power. We then analyse two alternative mergers, and show that a downstream merger (which gi...
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In this paper we investigate the impact of vertical mergers on upstream firms’ ability to sustain collusion. We show in a number of models that the net effect of vertical integration is to facilitate collusion. Several effects arise. When upstream offers are secret, vertical mergers faciliate collusion through the operation of a foreclosure effect: Cheating unintegrated firms can no longer prof...
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We consider dynamic, infinitely repeated downstream price competition. In every period, a retailer cannot observe the contract that the competing retailer offers to a joint supplier. We find that even though contracts are secret, they enable retailers to collude. The more the retailers and the supplier care about future profits, retailers obtain a higher share of the monopoly profits. We also f...
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It is well known that vertical integration can change the pricing incentive of an upstream producer. However, it has not been noticed that vertical integration may also change the pricing incentive of a downstream producer and the incentive of a competitor in choosing input suppliers. I develop an equilibrium theory of vertical merger that incorporates these additional strategic considerations....
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ژورنال
عنوان ژورنال: Research in Economics
سال: 2001
ISSN: 1090-9443
DOI: 10.1006/reec.2000.0255