Market structure, bargaining, and technology choice

Arbeitspapier

The first part of this paper analyzes the impact of horizontal mergers of suppliers or retailers on their respective bargaining power. In contrast to previous approaches, we suppose that parties resolve the bargaining problem efficiently. Moreover, by ensuring that demand is independent at all retailers we exclude monopolization effects. We find that downstream mergers are more likely (less likely) if suppliers have increasing (decreasing) unit costs, while upstream mergers are more likely (less likely) if goods are substitutes (complements). In both cases a merger enables the involved parties to gain access to inframarginal rents. In the second part of the paper we explore how the role of bargaining power affects technology choice under different market structures. We isolate two effects. First, if retailers are non-integrated, suppliers focus disproportionately more on inframarginal cost reduction. Second, this bias is mitigated if goods are substitutes and suppliers are non-integrated as competition exerts a disciplining force.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. FS IV 00-12

Classification and Topics

• Classification: Wirtschaft
• Subject: Merger ; Bargaining Power ; Technology Choice ; Fusionen ; Verhandlungsmacht ; Wahl der Produktionstechnologie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Inderst, Roman ; Wey, Christian
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2000

Further information

• Handle: http://hdl.handle.net/10419/51016
• Last update: 10.03.2025, 11:42 AM CET