Buyer Power, Exclusive Contracts, and Vertical Mergers in Competing Supply Chains: Implications for Competition Law and Policy

The law and economics approach to competition policy uses the tools of economics to showhow the interactions between firms may result in outcomes that are harmful to society, and howcompetition (antitrust) law can prevent such outcomes.

On working with three cases of no vertical merger, single chain vertical merger and double chain vertical merger we find that joint profits of upstream and downstream firms are lowest when both channels choose vertical integration as compared to Nash Bargaining regime. We also find that Vertical integration is welfare enhancing because retail price will be minimum as upstream and downstream firms behave as a single entity. Hence for both single and double chain mergers, elimination of double marginalization is procompetitive. These results have implications for the enforcement of competition (antitrust) law.

Recommended Citation

Srishti Gupta (2025) "Buyer Power, Exclusive Contracts, and Vertical Mergers in Competing Supply Chains: Implications for Competition Law and Policy ", GNLU Journal of Law And Economics : Volume V 2022, Issue I
Available at: https://gnlu.ac.in/GJLE/Publications/Buyer Power, Exclusive Contracts, and Vertical Mergers in Competing Supply Chains: Implications for Competition Law and Policy