Vertical integration with fixed cost in an upstream market: NSK/Amatsuji merger

Tomomichi Mizuno, Koki Arai, Chizuru Ikeda () and Nobufumi Nishimura ()
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Chizuru Ikeda: Graduate School of Law, Kobe University
Nobufumi Nishimura: Faculty of Economics, University of Toyama

Economics Bulletin, 2009, vol. 29, issue 3, 2438-2448

Abstract: In this paper, we discuss the case of the integration between NSK and Amatsuji Steel Ball by using the successive oligopoly model. We show that the integration does not lead to input foreclosure. However, it leads to customer foreclosure, if the fixed cost of a rival firm in the upstream market is high. Even in the case of customer foreclosure, since the integration reduces the final goods price, it is always beneficial for consumers.

Keywords: NSK/Amatsuji merger; Vertical integration; Foreclosure (search for similar items in EconPapers)
JEL-codes: L1 L4 (search for similar items in EconPapers)
Date: 2009-09-28
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