Quelle modélisation pour la stratégie des firmes intégrées sur le marché intermédiaire ?

Eric Avenel
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Eric Avenel: CEME - Université Paris 1

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: In successive oligopoly models, vertically integrated firms have the particularity to make profits both on the intermediate market and the final market. For this reason, they have an incentive, as compared to independent upstream firms, to propose a smaller quantity of intermediate good and, even, a negative quantity. Economists deal with this phenomenon in two different ways. Some impose a positivity constraint, some do not. In fact, neither of these two ways of modeling and integrated firm's strategy on the intermediate market is plainly satisfactory, as they exclude the possibility for the form either to foreclose rivals or to rise rivals' costs by overbuying. We propose here an alternative model in which integrated firms have tha possibility to commit to foreclosure and, if they choose not to commit to foreclosure, can adopt an overbuying strategy. This model allows for the study of the firm's choice between these two strategies

Keywords: vertical integration; foreclosure; overbuying (search for similar items in EconPapers)
JEL-codes: L12 L22 (search for similar items in EconPapers)
Pages: 14 pages
Date: 1998-01
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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:98024

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