Research
In Progress
Technology Paradigms, Lock-in, and Economic Growth
with Daron Acemoglu
Working Papers
Limits to Buyer Power: Input Prices and Pass-Through in Horizontal Merger Policy • PDF
February 2022
with Rebekah Dix
Abstract
We re-examine the "buyer power" defense to horizontal mergers using models of imperfect competition in which input prices are set before goods prices. We derive a measure of unilateral incentives to adjust input prices after a downstream merger, Input Pricing Pressure, and we use it to show that mergers often incentivize higher input prices. Consumer surplus-maximizing antitrust policy is often too lax when input prices are assumed fixed, and it should be biased against buyer power claims. In an empirical application to local retail beer markets, endogenizing input prices substantially raises the consumer harm from mergers of retailers.Publications
Implications of Uncertainty for Optimal Policies • PDF • Slides
Journal of Economic Theory, January 2022
with Maxim Troshkin