English, Article, Journal or magazine article edition: A simple model of anticompetitive vertical integration. Ramon Faulí-Oller; Joel Sandonís; Ramón Faulí-Oller

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Bookmark: http://trove.nla.gov.au/version/183386
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • A simple model of anticompetitive vertical integration.
Author
  • Ramon Faulí-Oller
  • Joel Sandonís
  • Ramón Faulí-Oller
Physical Description
  • preprint
Notes
  • The result of neutrality of vertical integration for competition postulated by the Chicago School can be supported by a benchmark model with (1) an upstream monopolist, (2) homogeneous goods downstream and (3) observable (two-part tariff) contracts. The result does not hold however, whenever any of the three assumptions is relaxed. In this paper we show first, that in presence of an alternative supply, vertical integration is profitable and leads to anticompetitive market foreclosure; second, under product differentiation, inefficient alternative supplies make vertical integration welfare improving, whereas it is profitable only for\ efficient enough second source supplies. As a consequence, a clear prescription for antitrust emerges: we should not allow for vertical integration.
  • Vertical integration; two-part tariff contracts; market foreclosure.
  • RePEc:ehu:biltok:200305
  • Vertical integration, market foreclosure, two-part tariff contracts
  • RePEc:ehu:dfaeii:200302
Language
  • English
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