Working Paper

Empirical evidence on vertical foreclosure

Abstract: Recent papers have shown conditions under which vertical, mergers can result in anticompetitive foreclosure of unintegrated rivals. These models imply that a necessary but not sufficient condition for anticompetitive foreclosure is that unintegrated rivals are less profitable after a vertical merger. We test this hypothesis by examining the stock prices of unintegrated rivals at the time of a vertical merger announcement and at the time of a government antitrust complaint. We find no evidence to support the foreclosure hypothesis.

Keywords: Consolidation and merger of corporations;

Status: Published in Economic Inquiry 32, no. 2 (April 1994): 303-17.

Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Working Papers

Publication Date: 1993

Number: 93-4