Unilateral Effects of Horizontal Mergers with Vertical Relations Between Firms and Other Structural Market Changes

Asphjell, Magne Krogstad; Bergh, Harald Nygård; Merker, Tyra; Skaar, Jostein

doi:10.1007/s11151-017-9566-z

Cited by 5 publications

(1 citation statement)

References 4 publications

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“…Bergh et al (2020) consider a setting where some non-merging firms are vertically integrated, and calculate how the incorporation of vertical relationships affects UPP calculations. In a similar spirit, Asphjell et al (2017) consider the upstream market response to a change in competitive conditions in the retail market. As in our work, they find that UPP calculations may overstate the price rise (and hence the ensuing harm) when supplier response is not considered.…”

Section: Relevant Literaturementioning

confidence: 99%

Horizontal Mergers and Supplier Power

Perkins,

Shekhar

2024

Rev Ind Organ

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Supplier market power—such as the ability of branded goods suppliers to dictate terms to retailers—is an important feature of many markets. We show that supplier power can counteract the effects of downstream mergers on consumer prices where there are two-part contracts. This is because greater market power allows suppliers to set contracts that internalise partially the impact of the merger on downstream prices. Post-merger, the supplier reduces the per-unit price at which it supplies the merged downstream firms, with the aim of maintaining total industry profitability—and then recoups the profits via a larger fixed fee. We modify the standard upward pricing pressure (UPP) formula to account for the supplier’s response to a horizontal merger in the downstream market, while preserving much of the simplicity of the standard approach.

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Section: Relevant Literaturementioning

confidence: 99%

Horizontal Mergers and Supplier Power

Perkins,

Shekhar

2024

Rev Ind Organ

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Unilateral Price Effects and Vertical Relations Between Merging and Non-merging Firms

2019

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Is the Whole Greater than the Sum of Its Parts? Pricing Pressure Indices for Mergers of Vertically Integrated Firms

Trost

2020

Rev Ind Organ

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The paper analyzes gross upward pricing pressure indices—$$\texttt {iGUPPI}$$ iGUPPI —to assess the anti-competitive effects of mergers between vertically integrated firms where independent rivals are active in the downstream market. Such indices could be used, for example, to screen mergers between mobile network operators that compete with mobile virtual network operators in the downstream retail market. It is shown that the $$\texttt {iGUPPI}$$ iGUPPI for the downstream divisions of the merging firms corresponds to the sum of two well-known upward pricing pressure indices: the $$\texttt {GUPPI}$$ GUPPI concept of Salop and Moresi (Georget Law J, 2009), and the $$\texttt {vGUPPI}$$ vGUPPI concept of Moresi and Salop (Antitrust Law J 79(1):185–214, 2013). However, this simple decomposition does not hold for their upstream divisions a priori. Here, additional effects that are not included in the two concepts arise. Further assumptions with respect to the price reactions of the downstream divisions to increases in the input prices are imposed so that the $$\texttt {iGUPPI}$$ iGUPPI for the upstream divisions is decomposable into an upstream market version of the $$\texttt {GUPPI}$$ GUPPI and the $$\texttt {vGUPPI}$$ vGUPPI .

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Unilateral Effects of Horizontal Mergers with Vertical Relations Between Firms and Other Structural Market Changes

Cited by 5 publications

References 4 publications

Horizontal Mergers and Supplier Power

Horizontal Mergers and Supplier Power

Unilateral Price Effects and Vertical Relations Between Merging and Non-merging Firms

Is the Whole Greater than the Sum of Its Parts? Pricing Pressure Indices for Mergers of Vertically Integrated Firms

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