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Title:Upstream horizontal mergers and efficiency gains PDF Logo
Authors:Milliou, Chrysovalantou
Pavlou, Apostolis
Issue Date:2009
Series/Report no.:CESifo working paper 2748
Abstract: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.
Subjects:horizontal mergers
vertical relations
efficiency gains
two-part tariffs
merger policy
JEL:L41
L42
L22
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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