Vertical mergers boost downstream collusion, benefiting consumers by lowering prices.
Vertical integration can either help or hinder downstream collusion, depending on market concentration. When an upstream firm merges with a downstream cartel or fringe firm, it can promote collusion under certain conditions. However, if the market is not concentrated, a merger with a cartel firm can actually disrupt collusion. Overall, consumer surplus increases with vertical mergers because they reduce the double marginalization issue.