Who is Doing What; to Prices?

Several different kinds of (vertical or horizontal) acquisitions have been closely monitored by anti-trust authorities in terms of market power although firms’ contract positions, various strategic bidding behaviours in spot market or their output decisions are not well investigated. Findings of this paper show that the existence of a well functioning forward market in a symmetric equilibrium framework (as widely advocated in the literature) makes consumers better off although there is no reason to believe that firms will follow only symmetric equilibrium strategy in practice. Existence of profitable deviations from the equilibrium demonstrates that the equilibrium may not be stable in the long-run. As a result, one can conclude that forward contracts would certainly reduce market power if and only if who is contracting with who is not producer firms.