Upstream horizontal mergers and efficiency gains

Arbeitspapier

We study upstream horizontal mergers and their potential efficiency gains. We show that an upstream horizontal merger can give rise to two efficiency-enhancing effects when firms trade through two-part tariffs. It increases R&D investments and decreases wholesale prices when downstream competition is not too strong. Examining whether the merger's potential efficiency gains can overcome its anti-competitive effects in terms of welfare, we show that when firms merge usually both of the above mentioned efficiencies are realized and they are passed on to consumers. This holds to a lesser extend when firms trade through linear contracts.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2748

Classification and Topics

• Classification: Wirtschaft ; Monopolization; Horizontal Anticompetitive Practices ; Vertical Restraints; Resale Price Maintenance; Quantity Discounts ; Firm Organization and Market Structure
• Subject: horizontal mergers ; vertical relations ; efficiency gains ; two-part tariffs ; merger policy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Milliou, Chrysovalantou ; Pavlou, Apostolis
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/30438
• Last update: 10.03.2025, 11:44 AM CET