Partial forward ownership and upstream quality investment

Ryo Masuyama

Economics Bulletin, 2022, vol. 42, issue 4, 1811 - 1816

Abstract: Partial forward ownership has been observed in many industries. We consider a linear city in which upstream firms invest in quality. Partial forward ownership increases the quality investment of an owning upstream firm. Although partial forward ownership increases market concentration and consumer transportation costs, consumer surplus increases because of higher quality. In addition, partial forward ownership increases total surplus if the upstream investment technology is efficient. Conversely, partial forward ownership hurts total surplus if the investment technology of upstream firms is inefficient or if they cannot make the investment. Therefore, the desirability of partial forward ownership depends on the efficiency of upstream investment.

Keywords: partial ownership; quality investment; vertical relationship; Hotelling model (search for similar items in EconPapers)
JEL-codes: D4 L1 (search for similar items in EconPapers)
Date: 2022-12-30
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2022/Volume42/EB-22-V42-I4-P150.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-22-00443

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().