Upstream Competition between Vertically Integrated Firms

Marc Bourreau, Johan Hombert, Jerome Pouyet and Nicolas Schutz
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Johan Hombert: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: We propose a model of two-tier competition between vertically integrated firms and unintegrated downstream firms. We show that, even when integrated firms compete in prices to offer a homogeneous input, the Bertrand logic may collapse, and the input may be priced above marginal cost in equilibrium. These partial foreclosure equilibria are more likely to exist when downstream competition is fierce or when unintegrated downstream competitors are relatively inefficient. We discuss the impact of several regulatory tools on the competitiveness of the wholesale market.

Keywords: Upstream Competition; Vertically Integrated Firms (search for similar items in EconPapers)
Date: 2011-12
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Citations: View citations in EconPapers (39)

Published in Journal of Industrial Economics, 2011, 59 (4), pp.677-713. ⟨10.1111/j.1467-6451.2011.00469.x⟩

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Journal Article: Upstream Competition between Vertically Integrated Firms (2011)
Working Paper: Upstream Competition between Vertically Integrated Firms (2011)
Working Paper: Upstream Competition between Vertically Integrated Firms (2010)
Working Paper: Upstream Competition between Vertically Integrated Firms (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:hal-00656608

DOI: 10.1111/j.1467-6451.2011.00469.x

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