Modeling the effects of mergers in procurement

Miller, Nathan

doi:10.1016/j.ijindorg.2014.10.001

Cited by 30 publications

(16 citation statements)

References 30 publications

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“…Now that we have discussed the methodology behind simulating mergers in an environment with upstream bargaining, we extend the framework to incorporate downstream auctions. We follow Miller (2014) and Miller (2017) in using a second score auction setting. The upstream model remains the same as in the previous sections.…”

Section: Downstream Auctionsmentioning

confidence: 99%

“…The retailer does not observe this value for products sold by other retailers. As shown in Miller (2014), the dominant strategy for any retailer in this auction is to supply only the product w ∈ W r to consumer i that gives the maximum possible utility net of marginal cost. That is, a retailer will not outbid itself.…”

Section: Downstream Auctionsmentioning

confidence: 99%

“…This article develops a unified framework that nests the models used in these merger cases. 34 We provide two options for downstream competition: the Bertrand logit (Werden and Froeb (1994)) and the logit second score auction (Miller (2014(Miller ( , 2017). 5 Whereas the Bertrand setup is often used to study consumer retail markets in which customers are price takers, the auction model is better suited for business-to-business transactions, where the buyer collects quotes from suppliers.…”

Section: Introductionmentioning

confidence: 99%

“…Our work is related to a large literature on merger simulation, including the aforementioned Miller (2014) and Werden and Froeb (1994). For a review of this topic, see Whinston (2007) and Werden and Froeb (2008).…”

Section: Introductionmentioning

confidence: 99%

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Simulating mergers in a vertical supply chain with bargaining

Sheu

Taragin

2021

The RAND J of Economics

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We model a two-level supply chain where Nash bargaining occurs upstream and firms compete in a logit setting downstream, either via Bertrand price setting or an auction. The parameters can be calibrated with a discrete set of data on prices, margins, and market shares, facilitating use by antitrust practitioners. We perform numerical simulations to identify cases where modelling the full vertical structure is important and where harm is likely. We also examine the thwarted Anthem/Cigna merger and show how the model weighs the various arguments made by the government and the defendants.

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Section: Downstream Auctionsmentioning

confidence: 99%

Section: Downstream Auctionsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Simulating mergers in a vertical supply chain with bargaining

Sheu

Taragin

2021

The RAND J of Economics

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“…There is a related literature on merger analysis based on auction models, including Waehrer (1999), Waehrer and Perry (2003), Miller (2014), and Froeb et al (2017). Waehrer (1999) examines mergers in both asymmetric first-price and second-price auction markets.…”

Section: Introductionmentioning

confidence: 99%

Merger Review for Markets with Buyer Power

Loertscher

Marx

2019

Journal of Political Economy

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We analyze the competitive effects of mergers in markets with buyer power. Using mechanism design arguments, we show that without cost synergies, mergers harm buyers, regardless of buyer power. However, buyer power mitigates the harm to a buyer from a merger of symmetric suppliers. With buyer power, a merger increases incentives for entry, increases investment incentives for rivals, and can increase investment incentives for merging parties. Because buyer power reduces the profitability of a merger, it increases the profitability of perfect collusion relative to a merger. Cost synergies can eliminate merger harm, but also render otherwise profitable mergers unprofitable.

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Competitors in merger control: Shall they be merely heard or also listened to?

Giebe

Lee

2020

Eur J Law Econ

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There are legal grounds to hear competitors in merger control proceedings, and competitor involvement has gained significance. To what extent this is economically sensible is the focus of our game-theoretic analysis. The competition authority applies some welfare standard while the competitor cares about its own profit. In expectation, there is neither a pure conflict nor a complete alignment of interest. We distinguish hard and soft information and ask whether hearing the competitor might convey valuable but non-verifiable information to the authority. We identify a case where, based on the authority’s verifiable information, the authority’s decision is improved by following the competitor’s selfish but non-verifiable communication. We argue that the practical relevance of this constellation is very limited, especially so under a consumer welfare standard. Thus, non-verifiable information should mostly be ignored. Complementary to our analysis, we provide empirical data of competitor involvement in EU merger cases and give an overview of the legal discussion in the EU and US.

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Modeling the effects of mergers in procurement

Cited by 30 publications

References 30 publications

Simulating mergers in a vertical supply chain with bargaining

Simulating mergers in a vertical supply chain with bargaining

Merger Review for Markets with Buyer Power

Competitors in merger control: Shall they be merely heard or also listened to?

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