Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260542 
Year of Publication: 
2022
Series/Report no.: 
DICE Discussion Paper No. 389
Publisher: 
Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Düsseldorf
Abstract: 
This paper analyzes vertical integration incentives in a bilaterally duopolistic industry where input market outcomes are determined by bargaining. Vertical integration incentives are a combination of horizontal integration incentives up- and downstream and depend on the strength of substitutability or complementarity and the shape of the unit cost function. In contrast to the widely prevailing view in competition policy, vertical integration can under particular circumstances convey more bargaining power to the merged entity than a horizontal merger to monopoly. In a bidding game for an exogenously determined target firm, a vertical merger can dominate a horizontal one, while pre-emption does not occur.
Subjects: 
Bargaining
Vertical Mergers
Shapley Value
JEL: 
L13
L22
L42
ISBN: 
978-3-86304-388-9
Document Type: 
Working Paper

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