Supplier fixed costs and retail market monopolization
Vanessa von Schlippenbach and
Christian Wey ()
No 164, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
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)
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-mic
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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:zbw:dicedp:164
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