When Vertical is Horizontal: How Vertical Mergers Lead to Increases in “Effective Concentration”

This article explains the inherent loss of an indirect competitor and reduction in competition when a vertical merger raises input foreclosure concerns. We then calculate measure effective increase HHI concentration for downstream market, we refer to this “proxy” as “dHHI.” derive dHHI by comparing pricing incentives associated upward pressure (“UPP”) that are involved two alternative types acquisitions: (1) mergers raise unilateral concerns (and GUPPI measures); (2) horizontal acquisitions partial ownership interests among competitors effects modified measures). can be useful tool analysis.