Publication
Publication
Buyer Power and the Effect of Vertical Integration on Innovation, w/ Claire Chambolle.
Forthcoming in Journal of Economics & Management Strategy (2025)
Our article investigates the impact of vertical integration (without foreclosure) on innovation. We compare cases where either (i) two manufacturers or (ii) a manufacturer and a vertically integrated retailer invest. Then, the independent manufacturer(s) and the retailer bargain over non-linear contracts before selling to consumers. We show that vertical integration always increases the incentives to invest on the integrated product which stifles (resp. spurs) the investment of the independent manufacturer when spillovers are low (resp. high). In contrast, when investments are sequential, if the buyer power is high, the leader independent manufacturer invests more (resp. less) to discourage the integrated retailer's investment when spillovers are low (resp. high). Furthermore, vertical integration is always profitable even when it is not desirable for the industry and welfare. Overall, vertical integration is only desirable for the industry when the buyer power is high and may damage welfare when both the buyer power and spillovers are low.
Merger Remedies and Bargaining Power in the Coffee Market, w/ Yann Delaprez. DIW Discussion Paper 2088, 51 S (2024).
Revise & Resubmit, Journal of Industrial Economics
This paper analyzes a merger of large manufacturers with divestiture in the French coffee market. In contrast to previous approaches used to study the effects of upstream divestitures on prices and welfare, we model the vertical market structure. First, our results show that the standard policy recommendation to require divestiture to small recipient firms may not hold when asymmetric bargaining power between firms is considered. Second, we show that previous models significantly overestimate costs. We estimate costs that are 12 percent lower, and find that divestiture can lead to marginal cost savings for the buyer of the divested brand.
Paper awarded the best May Forum paper 2021 at EUI.
On Bargaining Power and the Inconsistencies Between Prices, Costs and Markups, w/ Yann Delaprez.
Effectiveness of Horizontal Merger Remedies in Vertical Markets, w/ Yann Delaprez. Concurrences No 1-2024, Art. N° 116766, pp. 32-37
Innovation, Imitation and Vertical Competition, w/ Céline Bonnet and Zohra Bouamra-Mechemache
Understanding Prices and Markups through the Evolution of Bargaining Power, w/ Yann Delaprez - Awarded BCCP seed grant (2024)