Essays on antitrust issues for horizontal and vertical mergers

This thesis comprises four essays on antitrust issues for horizontal and vertical mergers. In the first essay we study horizontal mergers when firms have asymmetric strategic roles. In this essay we assume a sequential merger formation game in a setting where: (i) firms compete `a la Stackelberg; (ii) all firms are ex-ante symmetric, but as mergers may give rise to endoge- nous efficiency gains, cost asymmetries between the remaining firms in the industry may be created; and (iii) every merger has to be submitted for approval to the Antitrust Authority. In particular, we consider two possible types of Antitrust Authorities: a myopic Antitrust Au- thority, that evaluates a merger proposal without anticipating possible subsequent mergers, and a forward looking Antitrust Authority, which is able to anticipate the ultimate market structure if the merger is approved. The second essay uses a framework similar to the previous one. In this essay we inves- tigate mergers’ profitability, free-riding problem and induced effects on social and consumer welfare when firms are in a Stackelberg market and mergers can create cost heterogeneity between the remaining firms in the industry. In particular, we show that conclusions about the merger profitability, the social welfare effects and the existence of a free-riding problem crucially depend on whether the merger creates synergies. In the third essay we explore the role of uncertainty in merger control and in merger de- cisions. In a Cournot setting, we consider that mergers may give rise to uncertain efficiency gains and that every merger has to be submitted for approval to the Antitrust Authority. We assume that both the Antitrust Authority and the firms in the industry face the same uncer- tainty about the future efficiency gains induced by the merger. The purpose of this essay is not only to study the impact of the existence of uncertainty in the likelihood of the merger being proposed by the firms and accepted by the Antitrust Authority but also to analyze how the uncertainty affects outsider firms’ incentives to free-ride on it. Finally, the fourth essay analyzes how vertical integration increases downstream firm’s incentives to collude. The main contribution of this essay is to highlight the importance of considering, simultaneously, two types of firms’ strategies: vertical integration and collusion, in a context where some firms have no incentives to collude (incomplete collusion)