Abstract and Keywords
This chapter traces the history of the interplay between the antitrust treatment of vertical mergers and the economics literature on the competitive effects of vertical mergers. Vertical mergers create upward pricing pressure (through foreclosure effects) and downward pricing pressure (through the elimination of double marginalization). Even when the net pricing pressure is positive, however, antitrust agencies might find it difficult to measure the effects sufficiently precisely and reliably to support a successful antitrust merger challenge. They might have more success challenging vertical mergers of dominant firms at successive stages on the grounds that the dominant firm at one stage constrains market power at the adjacent stage by threatening either to enter or to sponsor entry.
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