Equilibrium downstream mark-up and upstream free entry
Discussion Paper Series from Department of Economics, University of Macedonia
We consider a successive Cournot oligopoly model where firms freely enter into the upstream market. We show that, under specific conditions, a higher number of downstream firms can lead to a higher mark-up in the downstream market. Although downstream market power may increase, consumer prices still decrease with the number of downstream firms implying that higher market power does not necessarily imply lower consumer surplus.
Keywords: Vertical relations; Cournot competition; Free entry; Market Power. (search for similar items in EconPapers)
JEL-codes: L22 (search for similar items in EconPapers)
Date: 2014-09, Revised 2014-09
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:mcd:mcddps:2014_02
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