Publisher: John Wiley & Sons Inc
E-ISSN: 1467-9957|83|5|604-621
ISSN: 1463-6786
Source: THE MANCHESTER SCHOOL, Vol.83, Iss.5, 2015-09, pp. : 604-621
Disclaimer: Any content in publications that violate the sovereignty, the constitution or regulations of the PRC is not accepted or approved by CNPIEC.
Abstract
This paper generalizes the model of Salant et al. (1983; Quarterly Journal of Economics, Vol. 98, pp. 185–199) to a successive oligopoly model with product differentiation. Upstream firms produce differentiated goods, retailers compete in quantities, and supply contracts are linear. We show that if retailers buy from all producers, downstream mergers do not affect wholesale prices. Our result replicates that of Salant's, where mergers are not profitable unless the size of the merged firm exceeds 80 per cent of the industry. This result is robust to the type of competition.
Related content
An Evolutionary Model of Bertrand Oligopoly
By Alos-Ferrer C. Ania A.B. Schenk-Hoppe K.R.
Games and Economic Behavior, Vol. 33, Iss. 1, 2000-10 ,pp. :