Complementary Monopolies and Bargaining
نویسنده
چکیده
How should complementarities a¤ect antitrust merger policy? I introduce a two-stage strategic model in which complementary input sellers o¤er supply schedules to producers and then engage in bilateral bargaining with producers. The main result is that there is a unique weakly dominant strategy equilibrium and the equilibrium attains the joint pro t maximizing outcome. Output equals that of a bundling monopoly and total input prices are lower than prices with a bundling monopoly. The result holds with perfect competition in the downstream market. The result also holds with oligopoly competition in the downstream market. This implies that the Cournot E¤ect does not hold when companies negotiate supply contracts rather than using posted prices. The analysis has implications for antitrust policy towards vertical, conglomerate, and horizontal mergers.
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