This paper by Oliver Hart and Jean Tirole explores the anti-competitive effects of vertical mergers, particularly how they can lead to market foreclosure. The authors develop a theoretical model that allows for a wide range of contractual arrangements between integrated and non-integrated firms, and consider the potential responses of non-integrated firms to integration decisions. The model is structured to examine three variants of vertical integration: ex-post monopolization, where an upstream firm merges with a downstream firm to restrict output in the downstream market; scarcity needs, where integration ensures a downstream firm purchases supplies from a specific upstream firm; and scarcity supplies, where integration ensures an upstream firm supplies its scarce resources to a downstream partner. The paper also analyzes the welfare implications of vertical mergers, identifying conditions under which market foreclosure is likely and suggesting that mergers involving efficient or large firms should be subject to closer scrutiny by antitrust authorities.This paper by Oliver Hart and Jean Tirole explores the anti-competitive effects of vertical mergers, particularly how they can lead to market foreclosure. The authors develop a theoretical model that allows for a wide range of contractual arrangements between integrated and non-integrated firms, and consider the potential responses of non-integrated firms to integration decisions. The model is structured to examine three variants of vertical integration: ex-post monopolization, where an upstream firm merges with a downstream firm to restrict output in the downstream market; scarcity needs, where integration ensures a downstream firm purchases supplies from a specific upstream firm; and scarcity supplies, where integration ensures an upstream firm supplies its scarce resources to a downstream partner. The paper also analyzes the welfare implications of vertical mergers, identifying conditions under which market foreclosure is likely and suggesting that mergers involving efficient or large firms should be subject to closer scrutiny by antitrust authorities.