Product differentiation when competing with the suppliers of bottleneck inputs
Duarte Brito and
Regional Science and Urban Economics, 2009, vol. 39, issue 1, 43-53
We analyze the product differentiation decision of a downstream entrant that purchases access to a bottleneck input from one of two vertically integrated incumbents, who will compete with him in the downstream market. First, an entrant chooses his product, then the entrant negotiates the access price with two incumbents, and finally the firms compete on retail prices. Counter-intuitively, both the entrant and the access provider prefer that the entrant chooses a product that is a closer substitute of the product of the access provider than of the product of the other incumbent. This occurs because the access provider interacts with the entrant both in the retail market and the wholesale market. We also consider the cases where both parties make the access price offers and where the bargaining stage precedes the location stage.
Keywords: Horizontal; differentiation; Location; Access; price (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Product Differentiation when Competing with the Suppliers of Bottleneck Inputs (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:39:y:2009:i:1:p:43-53
Access Statistics for this article
Regional Science and Urban Economics is currently edited by D.P McMillen and Y. Zenou
More articles in Regional Science and Urban Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().