Option Contracts and Vertical Foreclosure
Abstract
A model of vertical integration is studied. Upstream firms sell differentiated inputs; downstream firms bundle them to make final products. Downstream products are sold as option contracts, which allow consumers to choose from a set of commodities at predetermined prices. The model is illustrated by examples in telecommunication and health markets. Equilibria of the integration game must result in upstream input foreclosure and downstream monopolization. Consumers may or may not benefit from integration. Copyright (c) 1997 Massachusetts Institute of Technology.Download Info
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Bibliographic Info
Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.
Volume (Year): 6 (1997)
Issue (Month): 4 (December)
Pages: 725-753
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Related research
Keywords:Other versions of this item:
- Ching-to Albert Ma, 1995. "Option Contracts and Vertical Foreclosure," Papers 0061, Boston University - Industry Studies Programme.
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Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
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- Argenton, Cédric, 2006.
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- Argenton, C., 2008. "Exclusive Quality," Discussion Paper 2008-20, Tilburg University, Center for Economic Research.
- Argenton, C., 2008. "Exclusive Quality," Discussion Paper 2008-007, Tilburg University, Tilburg Law and Economic Center.
- Augusto Rupérez Micola & Albert Banal Estañol & Derek W. Bunn, 2006.
"Incentives and Coordination in Vertically Related Energy Markets,"
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- Micola, Augusto Rupérez & Banal-Estañol, Albert & Bunn, Derek W., 2008. "Incentives and coordination in vertically related energy markets," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 381-393, August.
- Rachel E. Kranton & Deborah F. Minehart, 2002. "Vertical Foreclosure and Specific Investments," Economics Working Papers 0013, Institute for Advanced Study, School of Social Science.
- Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.
- David Bardey & Jean-Charles Rochet, 2010.
"Competition Among Health Plans: A Two-Sided Market Approach,"
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- David Bardey & Jean-Charles Rochet, 2009. "Competition among health plans: a two-sided market approach," DOCUMENTOS DE TRABAJO 005217, UNIVERSIDAD DEL ROSARIO.
- Michael H. Riordan, 2005. "Competitive effects of vertical integration," Discussion Papers 0506-11, Columbia University, Department of Economics.
- repec:mop:credwp:04.05.45 is not listed on IDEAS
- Baranes, E. & Bardey, D., 2004.
"Competition in Health Care Markets and Vertical Restraints,"
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- Noriaki Matsushima & Tomomichi Mizuno, 2009. "Vertical Separation as a Defense against Strong Suppliers," ISER Discussion Paper 0755, Institute of Social and Economic Research, Osaka University.
- Biglaiser, Gary & Vettas, Nikolaos, 2004. "Dynamic Price Competition with Capacity Constraints and Strategic Buyers," CEPR Discussion Papers 4315, C.E.P.R. Discussion Papers.
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