Portfolio analysis in European merger control: an economic analysis
Vergé, Thibaud (2002) Portfolio analysis in European merger control: an economic analysis. CMPO Working Paper, (02/046)
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Description/Abstract
The year 1997 saw the emergence of a new game theory in European merger control called the 'portfolio power theory'. The European Commission argues that the holder of a comprehensive portfolio of brands may obtain a stronger position vis-à-vis its customers, and can therefore more easily impose restrictions, such as full-line forcing.
The objective of this paper is to analyse this argument from a theoretical point of view. We show that tie-in sales allow the incumbent to deter entry and to eliminate the retailer's rent when the downstream sector is monopolised. When the producers compete directly for consumers, the second brand provides a new predation tool. This allows the incumbent to deter entry more easily, but it can also limit price distortion. In both cases, the welfare impact is not clear-cut.
| Item Type: | Article |
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| Related URLs: | |
| Subjects: | H Social Sciences > H Social Sciences (General) |
| Divisions: | University Structure - Pre August 2011 > School of Social Sciences > Economics |
| Item ID: | 33364 |
| Date Deposited: | 16 May 2006 |
| Last Modified: | 02 Mar 2012 12:05 |
| Contributors: | Vergé, Thibaud (Author) |
| Date: | 2002 |
| Status: | Published |
| Contact Email Address: | T.Verge@soton.ac.uk |
| URI: | http://eprints.soton.ac.uk/id/eprint/33364 |
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