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date: 25 February 2021

Abstract and Keywords

This chapter addresses several theories of integration through merger of activities at successive stages of production and distribution under different market conditions. It provides analyses of the principal issues associated with vertical merger from the perspective of evaluating its competitive effects. In this regard, we concern ourselves with the profitability and the welfare effects of vertical merger between one or more firms in an input market and one or more firms in an output market. Our main conclusion is that vertical merger rarely is anticompetitive, but often harms competitors. Finally, this chapter evaluates antitrust agencies’ success in identifying market conditions that are predictive of the net competitive effects of vertical merger.

Keywords: antitrust, vertical merger, vertical integration, quasi-rent, leverage theory, discriminatory access, tying, competition, foreclosure, commitment

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