Supplier Fixed costs and Retail Market Monopolization
Vanessa von Schlippenbach and
Christian Wey ()
No 14-524, TSE Working Papers from Toulouse School of Economics (TSE)
Considering a vertical structure with perfectly competitive upstream firms that deliver a homogenous good to a differentiated retail duopoly, we show that upstream fixed costs may help to monopolize the downstream market. We find that downstream prices increase in upstream firms'fixed costs when both intra- and interbrand competition exist. Our findings contradict the common wisdom that fixed costs do not affect market outcomes.
Keywords: Fixed Costs; Vertical Contracting; Monopolization (search for similar items in EconPapers)
JEL-codes: L13 L14 L42 (search for similar items in EconPapers)
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Working Paper: Supplier Fixed Costs and Retail Market Monopolization (2014)
Working Paper: Supplier fixed costs and retail market monopolization (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:28317
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