 Cross‐Market Integration and SabotageHong Guo, Yabing Jiang, Arthur Lim and Asoo J. Vakharia Production and Operations Management, 2019, vol. 28, issue 8, 1939-1956 Abstract: Sabotage activities often raise controversies and regulatory concerns due to the potential negative effects on competition and social welfare. These concerns are amplified when firms serving complementary markets integrate due to the integrated firm’s capability to engage in multi‐market sabotage. We note that the integrated firm’s incentive to engage in sabotage activities and the potential impact on social welfare has not been examined, and this drives the primary focus of our study. Interestingly, we find that the integrated firm may not have the incentive to engage in sabotage at all. We show that the integrated firm prefers to engage in sabotage (single‐market or multi‐market) only when it has cost advantages over its rivals in at least one of the markets. At the extreme, a certain level of sabotage actions could even force some product combinations out of the market and thus, there might be a need for regulatory intervention. A counter‐intuitive result is that under certain market conditions, the integrated firm’s sabotage activities correspond to those that would optimize social welfare. Date: 2019 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:28:y:2019:i:8:p:1939-1956 Ordering information: This journal article can be ordered from Access Statistics for this article Production and Operations Management is currently edited by Kalyan Singhal More articles in Production and Operations Management from Production and Operations Management Society |
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