EconPapers    
Economics at your fingertips  
 

Collective exclusion

Claudio A. Calcagno and Liliane Giardino-Karlinger ()

International Journal of Industrial Organization, 2019, vol. 63, issue C, 326-375

Abstract: This paper studies collusion among vertically integrated incumbents who may either delegate output production to a more efficient downstream entrant (“accommodating regime”) or refuse to supply the entrant and produce the final good themselves (“exclusionary regime”). Accommodating agreements yield higher collusive profits, but suffer from contractual frictions: An incumbent may first offer the entrant a high wholesale price for the input, and then undercut the entrant on the final good market, so that the entrant cannot recover its high input costs downstream. When the efficiency gap between the incumbents and the entrant is small, this hold-up effect dominates over the efficiency effect. Depending on modeling choices, exclusionary collusion is then either more profitable than accommodation, or is the only sustainable collusive regime.

Keywords: oligopoly; foreclosure; collusion; opportunism; vertical integration (search for similar items in EconPapers)
JEL-codes: L13 L41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718717300449
Full text for ScienceDirect subscribers only

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:eee:indorg:v:63:y:2019:i:c:p:326-375

DOI: 10.1016/j.ijindorg.2018.12.002

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-06-10
Handle: RePEc:eee:indorg:v:63:y:2019:i:c:p:326-375