Vertical mergers and product differentiation

Noriaki Matsushima

No 2006-09, Discussion Papers from Kobe University, Graduate School of Business Administration

Abstract: This paper presents the development of an equilibrium theory of vertical merger that incorporates strategic behaviors in the Hotelling-type location model for the purpose of considering the relationship between the strategies of downstream firms for product differentiation and vertical integration. I show that vertical integration enhances the degree of product differentiation of the integrated firm. Under some conditions, partial integration appears to be in equilibrium and may increase the profit of the non-integrated downstream firm. Welfare implications of vertical integration are briefly discussed.

Keywords: product differentiation; vertical integration; location model; foreclosure (search for similar items in EconPapers)
JEL-codes: D43 L13 L22 R32 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2006-03
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Citations: View citations in EconPapers (4)

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https://www.b.kobe-u.ac.jp/papers_files/2006_09.pdf First version, 2006 (application/pdf)

Related works:
Journal Article: VERTICAL MERGERS AND PRODUCT DIFFERENTIATION* (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:kbb:dpaper:2006-09

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