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Discussion Paper Details

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Title: Vertical Merger, Collusion, and Disruptive Buyers

Author(s): Volker Nocke and Lucy White

Publication Date: March 2010

Keyword(s): antitrust, collusion, merger guidelines, vertical integration and vertical merger

Programme Area(s): Industrial Organization

Abstract: In a repeated game setting of a vertically related industry, we study the collusive effects of vertical mergers. We show that any vertical merger facilitates upstream collusion, no matter how large (in terms of capacity or size of product portfolio) the integrated downstream buyer. But a vertical merger with a larger buyer helps more to facilitate upstream collusion than a similar merger with a smaller buyer. This formalizes the idea expressed in the U.S. and EU non-horizontal merger guidelines that some downstream buyers may be more "disruptive" of collusive schemes than others.

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Bibliographic Reference

Nocke, V and White, L. 2010. 'Vertical Merger, Collusion, and Disruptive Buyers'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7722