Share This Article:

Vertical Mergers, Raising Rivals’ Costs and Foreclosure in a Network Industry

Abstract Full-Text HTML XML Download Download as PDF (Size:376KB) PP. 443-460
DOI: 10.4236/me.2014.54043    2,591 Downloads   3,562 Views  
Author(s)    Leave a comment

ABSTRACT

Foreclosure through raising a network rival’s costs may not be detrimental in the short-term, but in the longer-term it may allow a predator to expand its market share. The focus of antitrust opinion in assessing potential vertical mergers should therefore be on the longer-term effects of such mergers.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

Oyenuga, A. (2014) Vertical Mergers, Raising Rivals’ Costs and Foreclosure in a Network Industry. Modern Economy, 5, 443-460. doi: 10.4236/me.2014.54043.

References

[1] Bork, R.H. (1969) Vertical Integration and Competitive Processes. In: Weston, J.F. and Peltzman, S., Eds., Public Policy toward Mergers, Pacific Palisades, Los Angeles, 139-149.
[2] Bork, R.H. (1978) The Antitrust Paradox. New York.
[3] Posner, R.A. (1976) Antitrust Law. University of Chicago Press, Chicago.
[4] Posner, R.A. and Easterbrook, F.H. (1981) Antitrust. West Publishing, St. Paul.
[5] Ordover, J.A., Saloner, G. and Salop, S.C. (1990) Equilibrium Vertical Foreclosure. The American Economic Review, 80, 127-142.
[6] Salinger, M.A. (1988) Vertical Mergers and Market Foreclosure. The Quarterly Journal of Economics, 103, 345-356. http://dx.doi.org/10.2307/1885117
[7] Rey, P. and Tirole, J. (2006) A Primer on Foreclosure. Forthcoming in: Armstrong, M. and Porter, R., Eds., Handbook of Industrial Organization III. http://idei.fr/doc/by/tirole/primer.pdf
[8] European Union. 2008/C 265/07. Guidelines on the Assessment of Non-Horizontal Mergers under the Council Regulation on the Control of Concentrations between Undertakings.
[9] Baker, J.B. (2001) A Preface to Post-Chicago Antitrust. http://ssrn.com/abstract=296119
http://dx.doi.org/10.2139/ssrn.296119
[10] Perry, M.K. (1989) Vertical Integration: Determinants and Effects. In: Schmalensee, R. and Willig, R.D., Eds., Handbook of Industrial Organization I, Elseveier Science, B.V., Amsterdam.
[11] Riordan, M. (2008) Competitive Effects of Vertical Integration. Forthcoming in: Buccirossi, P., Ed., Handbook of Antitrust Economics, MIT Press, Cambridge, 145-182.
[12] Salop, S.C. (2005) Anticompetitive Overbuying by Power Buyers. Antitrust L.J., 669-715.
http://scholarship.law.georgetown.edu/facpub/211
[13] Granitz, E. and Klein, B. (1996) Monopolization by “Raising Rivals’ Costs”: The Standard Oil Case. Journal of Law and Economics, 39, 1-47.
[14] Krattenmaker, T.G. and Salop, S.C. (1987) Exclusion and Antitrust. Regulation. Nos. 3/4.
[15] Loertscher, S. and Reisinger, M. (2009) Competitive Effects of Vertical Integration with Downstream Oligopsony and Oligopoly. Governance and the Efficiency of Economic Systems (GESY). Discussion Paper No. 278.
[16] Nelson, R. (1957) Increased Rents from Increased Costs: A Paradox of Value Theory. Journal of Political Economy, 65, 387-393. http://dx.doi.org/10.1086/257957
[17] Scheffman, D.T. and Higgins, R.S. (2003) Twenty Years of Raising Rivals’ Costs: History, Assessment, and Future. George Mason Law Review, 12, 371-388.
[18] Salop, S.C. and Scheffman, D.T. (1983) Raising Rivals’ Costs. The American Economic Review, 73, 267-271.
[19] Borenstein, S., Bushnell, J. and Stoft, S. (2000) The Competitive Effects of Transmission Capacity in a Deregulated Electricity Industry. Rand Journal of Economics, 31, 294-325.
[20] Brueckner, J.K. and Spiller, P.T. (1991) Competition and Mergers in Airline Networks. International Journal of Industrial Organization, 9, 323-342. http://dx.doi.org/10.1016/0167-7187(91)90015-D
[21] Ivaldi, M. and McCullough, G.J. (2001) Density and Integration Effects on Class I U.S. Freight Railroads. Joumal of Regulatory Economics, 19, 161-182.
http://dx.doi.org/10.1023/A:1011149324027
[22] Friebel, G., Ivaldi, M. and Pouyet, J. (2011) Competition and Industry Structure for International Rail Transportation. Idei Working Paper. http://idei.fr/doc/wp/2011/ivaldi_friebel_pouyet_2011.pdf
[23] Nerlove, M. (1963) Chapter 7. Returns to Scale in Electricity Supply. In: Christ, C., et al., Eds., Measurement in Economics, Stanford University Press, Palo Alto, 167-198.
[24] Kreps, D. and Scheinkman, J. (1983) Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes. Bell Journal of Economics, 14, 326-337. http://dx.doi.org/10.2307/3003636
[25] Tirole, J. (1988) The Theory of Industrial Organization. MIT Press, Cambridge.

  
comments powered by Disqus

Copyright © 2018 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.