Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/202415
Authors: 
Miller, Nathan
Podwol, Joseph
Year of Publication: 
2017
Series/Report no.: 
EAG Discussion Paper 17-2
Abstract: 
We examine how forward contracts affect economic outcomes under generalized market structures. In the model, forward contracts discipline the exercise of market power by making profit less sensitive to changes in output. This impact is greatest in markets with intermediate levels of concentration. Mergers reduce the use of forward contracts in equilibrium and, in markets that are sufficiently concentrated, this ampli-fies the adverse effects on consumer surplus. Additional analyses of merger profitability and collusion are provided. Throughout, we illustrate and extend the theoretical re-sults using Monte Carlo simulations. The results have practical relevance for antitrust enforcement.
Document Type: 
Working Paper

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