1994•Economic InquiryRequires access
EMPIRICAL EVIDENCE ON ON VERTICAL FORECLOSURE
Eric S. Rosengren, James W. Meehan
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Abstract
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. We 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. We find no evidence to support the foreclosure hypothesis.