EconPapers    
Economics at your fingertips  
 

Vertical Integration of Successive Monopolists: A Classroom Experiment

Tanya Rosenblat

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: This classroom experiment introduces students to the concept of double marginalization, i.e. the exercise of market power at successive vertical layers in a supply chain. By taking on roles of firms, students determine how the mark-ups are set at each successive production stage. They learn that final retail prices tend to be higher than if the firms were vertically integrated. Students compare the welfare implications of two potential solutions to the double marginalization problem: acquisition and franchise fees. The experiment also can stimulate a discussion of two-part tariffs, transfer pricing, contracting, and the Coase theorem.

Date: 2009-02-01
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Published in Perspectives on Economic Education Research, Spring 2009, vol. 5 no. 1

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:13027

Access Statistics for this paper

More papers in Staff General Research Papers Archive from Iowa State University, Department of Economics Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070. Contact information at EDIRC.
Bibliographic data for series maintained by Curtis Balmer ().

 
Page updated 2020-04-01
Handle: RePEc:isu:genres:13027