On the pro-competitive effects of passive partial backward ownership

Maria Alipranti, Emmanuel Petrakis and Panagiotis Skartados

Economics Letters, 2022, vol. 213, issue C

Abstract: We consider a vertically related market where an upstream monopolist supplier trades, via interim observable two-part tariff contracts, with two differentiated downstream Cournot competitors. We show that passive partial backward ownership (PPBO) is pro-competitive and welfare enhancing. PPBO exacerbates the upstream monopolist’s commitment problem and yields lower wholesale prices, and higher industry output, consumers surplus, and welfare than in the absence of PPBO.

Keywords: Passive partial backward ownership; Vertical relations; Two-part tariffs; Interim observable contracts (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: On the pro-competitive effects of passive partial backward ownership (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:213:y:2022:i:c:s016517652200057x

DOI: 10.1016/j.econlet.2022.110376

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