First-mover advantage reversals under passive cross forward ownership in vertically related markets

Emmanuel Petrakis and Panagiotis Skartados ()
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Panagiotis Skartados: University of Crete

Economic Theory Bulletin, 2022, vol. 10, issue 2, No 10, 303-311

Abstract: Abstract We consider a two-tier industry with an upstream monopolist trading, via interim observable linear tariff contracts, with two differentiated goods downstream Stackelberg competitors. The upstream monopolist owns a symmetric minority share on both downstream customers, i.e., there is passive cross forward ownership (PCFO). We show that PCFO may reverse the well-known first-mover advantage of the Stackelberg game. PCFO is also pro-competitive and welfare enhancing.

Keywords: Passive cross forward ownership; Vertical relations; Linear tariffs; Interim observable contracts; Stackelberg competition; First mover advantage (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s40505-022-00235-1

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