Equilibrium vertical foreclosure: reply

Article Abstract:

A1990 study revealed that vertical foreclosure can raise downstream prices and negatively affect unintegrated downstream competitors. Vertical integration provides the integrating company with a competitive advantage in the downstream market. The foreclosed downstream competitor does not benefit from integrating itself. The criticisms of David Reiffen in a 1992 study include that the findings are contingent on the ability of the integrated firm to establish a high upstream price, but the 1990 study shows that this is not true.

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Exclusionary vertical restraints law: has economics mattered?

Article Abstract:

The way in which the development of antitrust analysis of exclusionary vertical relationships is affected by economics is studied. The conclusions include that the law is affected by economics, that the way in which antitrust accepts new economic concepts is subject to randomness and that courts tend to restrict their engagement with new economic theories. Industrial-organization theories in antitrust appear to have a favorable future. Economists must present their theories to the legal community in an understandable way.

Antitrust law

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Equilibrium vertical foreclosure: comment

Article Abstract:

A 1990 study by Janusz A. Ordover, Garth Saloner and Steven C. Salop revealed that final product prices can increase as a result of vertical mergers and that these mergers can negatively affect welfare. The researchers admit that the postintegration pricing strategy has a dramatic effect on the results of the study. The findings are not very robust because different results are obtained when the number of upstream firms selling a homogeneous product is changed to three instead of two.

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