Equilibrium Vertical Foreclosure

Janusz A Ordover, Garth Saloner and Steven C Salop

American Economic Review, 1990, vol. 80, issue 1, 127-42

Abstract: The authors formulate a complete, but analytically simple, equilibrium model of vertical mergers to evaluate the logic of standard vertical foreclosure claims and the criticisms made of those claims. The model includes incentives of the integrated firm and unintegrated input suppliers to exclude rivals, and the potential holdout problem. In this fully specified model, vertical foreclosure can emerge in equilibrium. Copyright 1990 by American Economic Association.

Date: 1990
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