Vertical Merger Policy: Special Considerations in Regulated Industries

We examine the special considerations that vertical mergers can raise in regulated industries. We explain how regulation can affect the distribution of merger-induced benefits, the type of vertical mergers that arise, the potential for effective post-merger industry oversight, and the post-merger incentives of the merging entities. These considerations imply that vertical mergers that would reduce (enhance) welfare in unregulated settings can sometimes enhance (reduce) welfare in regulated settings.