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Empirical Evidence on Vertical Foreclosure.

  • Economics
  • Political Science


Recent papers have shown conditions under which vertical mergers can result in anticompetitive foreclosure of unintegrated rivals. One implication of these models is that a necessary condition for anticompetitive foreclosure is that unintegrated rival firms are less profitable after a vertical merger. The authors 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. They find no evidence to support the foreclosure hypothesis. Copyright 1994 by Oxford University Press.

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