Downstream mergers and producer's capacity choice: why bake a larger pie when getting a smaller slice?
Details
Serval ID
serval:BIB_6D2ACFA6D6E2
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Downstream mergers and producer's capacity choice: why bake a larger pie when getting a smaller slice?
Journal
The RAND Journal of Economics
ISSN
0741-6261
1756-2171
1756-2171
Publication state
Published
Issued date
12/2007
Peer-reviewed
Oui
Volume
38
Number
4
Pages
948-966
Language
english
Abstract
In this article, the effect of downstream horizontal mergers on the upstream producer's capacity choice was studied. Contrary to conventional wisdom, I find a nonmonotonic relationship: horizontal mergers induce a higher upstream capacity if the cost of capacity is low, and a lower upstream capacity if this cost is high. This result is explained by decomposing the total effect into two competing effects: a change in holdup and a change in bargaining erosion.
Keywords
Buyer Integration, Capacity Choice, Hold-up
Web of science
Publisher's website
Create date
14/11/2016 13:25
Last modification date
20/08/2019 15:26