CRESSE

Advanced Short Course 4

Advanced Short Course on Vertical Mergers

(3.5 a.h.¹)

Outline of Course Contents

  1. Vertical Mergers: An introduction

1.1 Main concepts

1.2 Economic models of vertical mergers

1.3 Modelling issues

1.3.1  Seller offer v. bargaining

1.3.2  Linear v. nonlinear contracts

1.3.3  Modelling investment effects

  1. Analyzing the Competitive Effects from Vertical Mergers

2.1 Simple screens

2.1.1 Vertical arithmetic

2.1.2 Upward and downward pricing pressure (e.g., “vGUPPIs”)

2.2 Pitfalls of simple screens

2.3 Equilibrium modelling

2.4 Examples

Main References

  • Israel, Mark, and Daniel P. O’Brien, “Tethering Vertical Merger Analysis,” [Link to be provided]
  • Israel, Mark, and Daniel P. O’Brien, “Vertical Mergers with Bilateral Contracting and Upstream and Downstream Investment (July 13, 2021). Available at SSRN: https://ssrn.com/abstract=3886048or http://dx.doi.org/10.2139/ssrn.3886048
  • Rey, Patrick, and Jean Tirole, “A Primer on Foreclosure,” Handbook of Industrial Organization3, pp. 2145-2220.

¹ a.h. = academic hour (50 minutes)