Download or read book On Vertical Mergers and Their Competitive Effects written by Yongmin Chen and published by . This book was released on 2002 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is well known that vertical integration can change the pricing incentive of an upstream producer. However, it has not been noticed that vertical integration may also change the pricing incentive of a downstream producer and the incentive of a competitor in choosing input suppliers. I develop an equilibrium theory of vertical merger that incorporates these additional strategic considerations. Under fairly general conditions, a vertical merger will result in both efficiency gains and a collusive effect. The competitive effects of a vertical merger depend on the cost of switching suppliers and the degree of downstream product differentiation.