Market Size and Vertical Equilibrium in the Context of Successive Cournot Oligopolies

Taille du marché et équilibre vertical dans un contexte d'oligopoles successifs de Cournot

Ivan Dufeu ()
Additional contact information
Ivan Dufeu: GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage

Post-Print from HAL

Abstract: This paper illustrates the effect of market size on the decision of whether or not firms should vertically integrate or disintegrate. We use a model of two successive stages of production with Cournot competition in each stage. In this model, firms choose to specialize (either upstream or downstream) or to integrate the two stages, before making their production decisions. The decision of whether or not to integrate or specialize depends on the trade-off between "escaping from" the double marginalization problem or the gain from specializing in the production stage in which the firm is more efficient. We show (using simulations) that more firms choose to be vertically integrated as the valuation of the final product or the number of consumers increases, unless the number of firms increases proportionately.

Keywords: double marginalization effect.; Vertical integration; vertical equilibrium; industry growth; successive Cournot oligopoly (search for similar items in EconPapers)
Date: 2004-01-27
Note: View the original document on HAL open archive server: https://univ-angers.hal.science/hal-02816481
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published in B.E. Journal in Theoretical Economics, Topics in Theoretical Economics, 2004, 4 (1), ⟨10.2202/1534-598X.1122⟩

Downloads: (external link)
https://univ-angers.hal.science/hal-02816481/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02816481

DOI: 10.2202/1534-598X.1122

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().