Upstream Competition between Vertically Integrated Firms

Marc Bourreau, Johan Hombert, Jerome Pouyet and Nicolas Schutz
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Johan Hombert: HEC Paris - Ecole des Hautes Etudes Commerciales

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Abstract: We propose a model of two-tier competition between vertically integrated firms and unintegrated downstream firms. We show that, even when integrated firms compete in prices to offer a homogeneous input, the Bertrand result may not obtain, and the input may be priced above marginal cost in equilibrium, which is detrimental to consumers' surplus and social welfare. We obtain that these partial foreclosure equilibria are more likely to exist when downstream competition is fierce. We then use our model to assess the impact of several regulatory tools in the telecommunications industry.

Keywords: Vertical foreclosure; vertically-related markets; telecommunications.; telecommunications (search for similar items in EconPapers)
Date: 2010-07-07
Note: View the original document on HAL open archive server: https://hal.science/hal-00440126v2
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Upstream Competition between Vertically Integrated Firms (2011)
Working Paper: Upstream Competition between Vertically Integrated Firms (2011)
Working Paper: Upstream Competition between Vertically Integrated Firms (2011)
Working Paper: Upstream Competition between Vertically Integrated Firms (2010)
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