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Divisionalization And Horizontal Mergers In A Vertical Relationship

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  • TOMOMICHI MIZUNO

Abstract

In this paper we evaluate the effects of horizontal mergers in a vertical relationship. Each downstream firm can create autonomous divisions. We show that an infinitesimal merger of downstream firms may exhibit a positive welfare effect if the upstream and downstream sectors are sufficiently unconcentrated. However, any merger of upstream firms reduces social welfare. Moreover, a decrease in the concentration in the upstream stage (respectively downstream stage or non‐merging stage) makes the welfare effects of the merger in the upstream stage (respectively downstream stage or non‐merging stage) less negative (respectively ambiguous or ambiguous).

Suggested Citation

  • Tomomichi Mizuno, 2009. "Divisionalization And Horizontal Mergers In A Vertical Relationship," Manchester School, University of Manchester, vol. 77(3), pages 317-336, June.
    • Handle: RePEc:bla:manchs:v:77:y:2009:i:3:p:317-336
    DOI: 10.1111/j.1467-9957.2009.02099.x
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    References listed on IDEAS

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    Cited by:

    1. Kazuhiro Takauchi & Tomomichi Mizuno, 2019. "Is competition in the transport industry bad?A welfare analysis of R&D with inter-regional transportation," Discussion Papers 1910, Graduate School of Economics, Kobe University.

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