Manufacturers Mergers and Product Variety in Vertically Related Markets

Arbeitspapier

We study final product manufacturers' incentives to introduce new products into the market and how they are affected by a merger among them. We show that when manufacturers distribute their products through multi-product retailers, a manufacturers merger, although it leads to an increase in the wholesale prices, it can enhance product variety. The merger generated product variety efficiencies though arise only when vertical relations are present: when manufacturers sell directly their products to consumers, a merger never results into more product variety. Still, both in the presence and in the absence of vertical relations, a manufacturers merger is harmful to consumers and welfare.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4932

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Oligopoly and Other Imperfect Markets ; Monopolization; Horizontal Anticompetitive Practices ; Vertical Restraints; Resale Price Maintenance; Quantity Discounts
• Subject: horizontal mergers ; product variety ; vertical relations

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Milliou, Chrysovalantou ; Sandonis, Joel
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/102141