Manufacturer Mergers and Product Variety in Vertically Related Markets

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Title: Manufacturer Mergers and Product Variety in Vertically Related Markets
Authors: Milliou, Chrysovalantou | Sandonís Díez, Joel
Research Group/s: Microeconomía Aplicada (GIMA)
Center, Department or Service: Universidad de Alicante. Departamento de Fundamentos del Análisis Económico
Keywords: Horizontal mergers | Product variety | Vertical relations
Knowledge Area: Fundamentos del Análisis Económico
Issue Date: Mar-2018
Publisher: Springer Science+Business Media New York
Citation: Journal of Industry, Competition and Trade. 2018, 18(1): 1-24. doi:10.1007/s10842-017-0251-6
Abstract: We study the incentives of final product manufacturers to introduce new products into the market and the impact of a manufacturer merger on them. We show that when manufacturers distribute their products through multi-product retailers, a manufacturer merger, although it leads to an increase in the wholesale prices, it can enhance product variety. The merger induced product variety enhancement though arises only when vertical relations are present: when manufacturers sell directly their products to consumers, a merger never results in more product variety. Still, both with or without vertical relations, a manufacturer merger hurts consumers and decreases welfare.
Sponsor: The first author gratefully acknowledges financial support from the Research Support Program - Action 1 of the Athens University of Economics and Business. The second author gratefully acknowledges financial support from Generalitat Valenciana under grant PROMETEO/2013/037 and from MINECO/FEDER under project ECO2012-34928.
ISSN: 1566-1679 (Print) | 1573-7012 (Online)
DOI: 10.1007/s10842-017-0251-6
Language: eng
Type: info:eu-repo/semantics/article
Rights: © Springer Science+Business Media New York 2017
Peer Review: si
Publisher version:
Appears in Collections:INV - GIMA - Artículos de Revistas

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