Abstract:How should complementarities affect antitrust merger policy? I introduce a two-stage strategic model in which complementary input sellers offer supply schedules to producers and then engage in bilater...How should complementarities affect antitrust merger policy? I introduce a two-stage strategic model in which complementary input sellers offer supply schedules to producers and then engage in bilateral bargaining with producers. The main result is that there is a unique weakly dominant strategy equilibrium and the equilibrium attains the joint profit maximizing outcome. Output equals that of a bundling monopoly and total input prices are lower than prices with a bundling monopoly. The result holds with perfect competition in the downstream market. The result also holds with oligopoly competition in the downstream market. This implies that the Cournot Effect does not hold when companies negotiate supply contracts rather than using posted prices. The analysis has implications for antitrust policy towards vertical, conglomerate, and horizontal mergers.Read More
Publication Year: 2016
Publication Date: 2016-01-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 6
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot