Market Concentration and the Analysis of Vertical Organization


  •  Jean-Paul Chavas    
  •  Guanming Shi    

Abstract

This paper proposes concentration indices that extend the classical Hirschman-Herfindahl Index to include vertical structures for differentiated products. The analysis shows how cross-product substitution/complementarity relationships across vertical channels can affect pricing. It also identifies the role played by market size. The usefulness of the approach is illustrated in an application to a merger analysis in the gasoline market.



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