Contrary to the seminal paper of Horn and Wolinsky (1988), we demonstrate that
upstream firms, which sell their products to competing downstream firms, do not always
have incentives to merge horizontally. In particular, we show that when bargaining
takes place over two-part tariffs, and not over wholesale prices, upstream firms prefer to
act as independent suppliers rather than as a monopolist supplier. Moreover, we show
that horizontal mergers can be procompetitive, even in the absence of efficiency gains.
28/02/2005
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