On Vertical Mergers and Their Competitive Effects

@article{Chen2000OnVM,
  title={On Vertical Mergers and Their Competitive Effects},
  author={Yongmin Chen},
  journal={The RAND Journal of Economics},
  year={2000},
  volume={32},
  pages={667-685}
}
  • Yongmin Chen
  • Published 24 January 2001
  • Economics
  • The RAND Journal of Economics
It is well known that vertical integration cats change the pricing incentive of an upstream producer. However, it has not been noticed that vertical integration may also change the pricing incentive of downstream producer and the incentive of a competitor in choosing input suppliers. I develop an equilibrium theory of vertical merger that incorporates these additional strategic considerations. Under fairly general conditions, a vertical merger will result in both efficiency gains and a… 

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