vertical merger

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Vertical merger

When one firm acquires another firm that is in the same industry but at another stage in the production cycle. For example, the firm being acquired serves as a supplier to the firm doing the acquiring.

Vertical Merger

A merger between two companies in the same industry but at different stages of the production cycle. A vertical merger can reduce the costs of the two companies by eliminating redundant processes. It also reduces reliance of one company on another. For example, an upstream oil company can merge with a downstream oil company to streamline operations.

vertical merger

A merger between two firms involved in the same business but on different levels. As an example, an automobile company may purchase a tire manufacturer or a glass company. The merger permits the firm to gain more control of another level of the manufacturing or selling process within that single industry. Compare horizontal merger.

vertical merger

A merger between companies that supply different goods or services but in a common industry.

References in periodicals archive ?
Spiller (1985) suggests that "site specific assets can increase the viability of a vertical merger .
Lubatkin (1983) suggests that vertical mergers will most likely benefit from the schedule economies where two levels of production at two stages of a value chain are merged.
In this case, it can be shown that a vertical merger does not change the seller's production capacity report, but it does cause the merged firm to overstate its consumption capacity.
Starting from our previous work, we have analysed the effects of vertical mergers in the framework of successive oligopolies on input and output prices, when these are determined by the market mechanism.
In all of the models of foreclosure we have examined, it can be shown that the foreclosed unintegrated rivals in the downstream market will be less profitable after a vertical merger of a rival.
It argues that network effects tilt the distribution of customer surplus in vertical mergers on digital markets and therefore there might be a need for less intervention by antitrust authorities in horizontal mergers on digital markets in order to achieve higher economic efficiency.
The word "horizontal" signals that the federal government has wisely decided to throw in the towel on vertical mergers, that is, those that bring under common management firms that control different stages of the production process.
Remaining chapters discuss exclusive dealing, predatory pricing, price discrimination, horizontal and vertical mergers, and jurisdictional issues and other limitations on coverage.
Abraham/Taylor 1996), Fan and Goyal (2006) find evidence that vertical mergers in the U.
Therefore, there is a need for scrutiny of vertical mergers even in the absence of market power.
For example, without incorporating the concept of "an equally or more efficient competitor," the test for vertical mergers focuses on the defendant's intent, (52) and the analysis for exclusionary practices that also offer efficiencies (which is raised in the discussion of the new economy) looks to whether a practice is "employed widely in industries that resemble the monopolist' s but are competitive.
Topics covered include: the economics of interconnection; equal access and unbundling; establishing prices for interconnection of wireless networks; antitrust litigation since the Telecom Act went into effect; changes to the universal services requirements; regulations and policies involving horizontal and vertical mergers and acquisitions; federal versus state regulatory authority; and, the rights and duties arising from the laws of privacy, intellectual property and free speech.