Forward Vertical Integration: The Fixed-Proportion Case Revisited

Olivier Bonroy () and Bruno Larue

MPRA Paper from University Library of Munich, Germany

Abstract: Assuming a fixed-proportion downstream production technology, partial forward integration by an upstream monopolist may be observed whether the monopolist is advantaged or disadvantaged cost-wise relative to fringe firms in the downstream market. Integration need not induce cost predation and the fringe firms’ margin may even increase. The output price falls and welfare unambiguously rises.

Keywords: Vertical integration; cost predation; cost asymmetries. (search for similar items in EconPapers)
JEL-codes: L22 (search for similar items in EconPapers)
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Date: 2006-09
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Journal Article: Forward Vertical Integration: The Fixed-Proportion Case Revisited (2007)
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