Incentives for sabotage in vertically related industries

David Mandy () and David E. M. Sappington

Journal of Regulatory Economics, 2007, vol. 31, issue 3, pages 235-260

Abstract: We show that the incentives of a vertically integrated supplier to “sabotage” the activities of downstream rivals can vary with both the type of sabotage and the nature of downstream competition. Cost-increasing sabotage is typically profitable under both Cournot and Bertrand competition. In contrast, demand-reducing sabotage is often profitable under Cournot competition, but unprofitable under Bertrand competition. Incentives for sabotage can vary non-monotonically with the degree of product differentiation. Copyright Springer Science+Business Media, LLC 2007

Keywords: Regulation; Sabotage; Vertically integrated industries; L51; L10; L22 (search for similar items in EconPapers)
Date: 2007
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Working Paper: Incentives for Sabotage in Vertically Related Industries (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:kap:regeco:v:31:y:2007:i:3:p:235-260

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