Vertical mergers and the vGUPPI: quantifying vertical foreclosure

Competition authorities around the world have for many years used sophisticated quantitative tools to assess the likely scale of harm from horizontal mergers. More recently, vertical mergers have also been increasingly scrutinized by competition authorities using a range of quantitative tools. These tools help the authorities to quantify the incentive of the merging parties to enact vertical foreclosure strategies that would harm competition. One of those tools, known as the vGUPPI (vertical gross upward pricing pressure index), uses the same theoretical economic framework as the quantitative assessment used in horizontal merger assessments. This article explains how the vGUPPI tool works and uses two recent merger decisions of the Competition and Markets Authority in the groceries sector as case studies.

Vertical Integration of Hospitals and Physicians: Economic Theory and Empirical Evidence on Spending and Quality

Hospital–physician vertical integration is on the rise. While increased efficiencies may be possible, emerging research raises concerns about anticompetitive behavior, spending increases, and uncertain effects on quality. In this review, we bring together several of the key theories of vertical integration that exist in the neoclassical and institutional economics literatures and apply these theories to the hospital–physician relationship. We also conduct a literature review of the effects of vertical integration on prices, spending, and quality in the growing body of evidence ( n = 15) to evaluate which of these frameworks have the strongest empirical support. We find some support for vertical foreclosure as a framework for explaining the observed results. We suggest a conceptual model and identify directions for future research. Based on our analysis, we conclude that vertical integration poses a threat to the affordability of health services and merits special attention from policymakers and antitrust authorities.

Welfare Implications of Deviation from Network Neutrality

This paper investigates how incentives of network operators to deviate from neutrality may create social costs or benefits in different market structures. The deviation from network neutrality is a general form of discrimination based on charging different prices for non-affiliated content and application providers. In this paper, deviation from network neutrality is formulated as a form of vertical foreclosure. While constructing the model two-sided nature of the internet service, the providing market is considered. The author found that, although monopoly network operators have no incentive to deviate from neutrality, the duopoly network operators have this incentive. Welfare analysis suggests destructive results for almost all participants, hence the total surplus in both market structures. In addition, the analysis for the degree of integration between the network operators and their affiliated content and application providers, suggest some policy proposals to discourage their degree of integration.