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Complementary monopolies and multi-product firms

Author

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  • Kopel, Michael
  • Löffler, Clemens
  • Pfeiffer, Thomas

Abstract

According to the classical result on complementary monopolies, a single-product firm unambiguously prefers purchasing complementary inputs from an integrated monopolistic supplier rather than from different non-integrated monopolistic suppliers. In this note, we account for the fact that firms often manufacture multiple products and show that the classical result on complementary monopolies can be reversed in such a case. Purchasing complementary inputs from non-integrated suppliers can be optimal for multi-product firms.

Suggested Citation

  • Kopel, Michael & Löffler, Clemens & Pfeiffer, Thomas, 2017. "Complementary monopolies and multi-product firms," Economics Letters, Elsevier, vol. 157(C), pages 28-30.
    • Handle: RePEc:eee:ecolet:v:157:y:2017:i:c:p:28-30
    DOI: 10.1016/j.econlet.2017.05.021
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    References listed on IDEAS

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    Cited by:

    1. Yen-Ju Lin & Yan-Shu Lin & Pei-Cyuan Shih, 2022. "Welfare reducing vertical licensing in the presence of complementary inputs," Journal of Economics, Springer, vol. 137(2), pages 121-143, October.
    2. Lin, Yen-Ju, 2022. "Consumer welfare, licensing, and exclusive dealing with vertically- and horizontally-differentiated products," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 147-158.

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