A Model of Vertical Oligopolistic Competition

Markus Reisinger and Monika Schnitzer ()

Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley

Abstract: This paper develops a model of successive oligopolies with endogenous market entry, allowing for varying degrees of product differentiation and entry costs in both markets. Our analysis shows that the downstream conditions dominate the overall profitability of the two-tier structure while the upstream conditions mainly affect the distribution of profits. We compare the welfare effects of upstream versus downstream deregulation policies and show that the impact of deregulation may be overvalued when ignoring feedback effects from the other market. Furthermore, we analyze how different forms of vertical restraints influence the endogenous market structure and provide conditions under which they are welfare enhancing.

Date: 2008-10-31
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Related works:
Working Paper: A Model of Vertical Oligopolistic Competition (2008)
Working Paper: A Model of Vertical Oligopolistic Competition (2008)
Working Paper: A Model of Vertical Oligopolistic Competition (2008)
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