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.
Publication Year: 2005
Publication Date: 2005-01-10
Language: en
Type: article
Access and Citation
Cited By Count: 5
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot