Vertical Foreclosure, Technological Choice, and Entry on the Intermediate Market

Eric Avenel and Corinne Barlet

Journal of Economics & Management Strategy, 2000, vol. 9, issue 3, 211-230

Abstract: This paper analyzes the profitability of vertical integration for an upstream monopoly facing a potential competitor. We show that it depends on the technology used by the firm when it integrates. We distinguish two types of technologies: standard technologies, used by nonintegrated firms, and nonstandard technologies, reserved for integrated firms and implying the complete foreclosure of nonintegrated firms. Vertical integration with the adoption of a nonstandard technology dominates vertical integration with the adoption of a standard technology and is profitable, as long as the degree of competition in the downstream industry is sufficiently low.

Date: 2000
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https://doi.org/10.1111/j.1430-9134.2000.00189.x-i1

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Journal Article: Vertical Foreclosure, Technological Choice, and Entry on the Intermediate Market (2000)
Working Paper: Vertical Foreclosure, Technological Choice and Entry on the Intermediate Market (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:9:y:2000:i:3:p:211-230

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