Asymmetric Vertical Integration
Journal
Advances in Theoretical Economics
ISSN
1534-5963
Type
journal article
Date Issued
2005-01-04
Author(s)
Abstract
We examine vertical backward integration in a reduced-form model of successive oligopolies. Our key findings are: (i) There may be asymmetric equilibria where some firms integrate and others remain separated, even if firms are symmetric initially; (ii) Efficient firms are more likely to integrate vertically. As a result, integrated firms also tend to have a large market share. The driving force behind these findings are demand/mark-up complementarities in the product market. We also identify countervailing forces resulting from strong vertical foreclosure, upstream sales and endogenous acquisition costs.
Language
English
HSG Classification
contribution to scientific community
Refereed
No
Publisher
Bepress
Publisher place
Berkeley, Calif.
Volume
5
Number
1
Start page
1
End page
25
Pages
25
Subject(s)
Eprints ID
51397