Retailer mergers drive efficiency, benefiting suppliers, retailers, and consumers alike.
This paper looks at how companies in certain industries make decisions about merging and choosing technology. The researchers found that mergers are more likely in some situations, like when suppliers have increasing costs or when goods are substitutes. They also discovered that suppliers focus on reducing costs when retailers are integrated and suppliers are not. In some cases, mergers can benefit everyone involved, including suppliers, retailers, and consumers. However, the best market structure doesn't always lead to the highest welfare for all.