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Upstream Downstream Specialization by Integrated Firms in a Partially Integrated Industry

Gérard Gaudet (), Ngo Long and Antoine Soubeyran ()

CIRANO Working Papers from CIRANO

Abstract: We propose a simple model of a partially integrated industry which explicitly takes into account persistent production cost differences across upstream firms, such as one might observe in natural resource industries. The model allows us to highlight the respective roles of strategic considerations in the determination of an integrated firm's interaction with the non-integrated sector of the industry and, in the end, on its relative upstream-downstream specialization. Stylized facts from the world oil industry are used to illustrate the type of behaviour one might expect in this context. On s'intéresse à la détermination du degré de spécialisation amont-aval d'une industrie partiellement intégrée. La situation est modélisée de sorte à pouvoir prendre en compte des différences persistantes de coût de production entre firmes en amont, ce qui est typique de plusieurs industries de ressources naturelles. Le modèle permet de faire ressortir les rôles respectifs des considérations stratégiques et des considérations de coût dans la détermination de l'interaction d'une firme intégrée avec le secteur non intégré de l'industrie et, de ce fait, la détermination de sa spécialisation relative amont-aval. Des faits stylisés tirés de l'industrie pétrolière mondiale viennent illustrer le type de comportement auquel on peut s'attendre dans un tel contexte.

Keywords: Integrated Firms; Specialization; Strategic Interactions; Firmes intégrées; spécialisation; interactions stratégiques (search for similar items in EconPapers)
Date: 1996-02-01
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https://cirano.qc.ca/files/publications/96s-08.pdf

Related works:
Journal Article: Upstream-Downstream Specialization by Integrated Firms in a Partially Integrated Industry (1999) Downloads
Working Paper: Upstream-Downstream Specialization by Integrated Firms in a Partially Integraded Industry (1996)
Working Paper: Upstream-Downstream Specialization by Integrated Firms in a Partially Integrated Industry (1996)
Working Paper: Upstream-Downstream Specialization by Integrated Firms in a Partially Integrated Industry (1996) Downloads
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