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Diagonal Mergers and Foreclosure in the Internet

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Author Info
Emanuele Giovannetti () (Faculty of Economics, University of Cambridge and University of Rome “La Sapienza”)

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Abstract

We study the incentives for a “diagonal” merger between two Internet Service Providers, one a wireless retail only ISP in two origination markets, and the second a vertically integrated wired retailer in one market and an upstream provider in the other. The merger’s effects depend on differentiation in access modalities; only with high differentiation does the merger have positive welfare effects. We focus on post-merger foreclosure, which, when it happens, only takes place in the market where the merger is horizontal and not where the merger is vertical. The Network architecture used is meant to capture Internet routing.

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Publisher Info
Article provided by Concept Economics in its journal Review of Network Economics.

Volume (Year): 4 (2005)
Issue (Month): 1 (March)
Pages: 33-62
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Handle: RePEc:rne:rneart:v:4:y:2005:i:1:p:33-62

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Related research
Keywords: vertical integration; ISP; diagonal merger; foreclosure;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Crémer, Jacques & Rey, Patrick & Tirole, Jean, 1999. "Connectivity in the Commercial Internet," IDEI Working Papers 87, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2000. [Downloadable!]
    Other versions:
  2. Giovannetti, Emanuele, 2002. "Interconnection, differentiation and bottlenecks in the Internet," Information Economics and Policy, Elsevier, vol. 14(3), pages 385-404, September. [Downloadable!] (restricted)
    Other versions:
  3. Buccirossi, Paolo, 1999. "Access to an Essential Facility: Efficient Component Pricing Rule or Unrestricted Private Property Rights?," Journal of Regulatory Economics, Springer, vol. 16(3), pages 287-96, November. [Downloadable!] (restricted)
  4. Ordover, Janusz A & Saloner, Garth & Salop, Steven C, 1990. "Equilibrium Vertical Foreclosure," American Economic Review, American Economic Association, vol. 80(1), pages 127-42, March. [Downloadable!] (restricted)
  5. Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany. [Downloadable!]
  6. Waverman, Leonard & Reynolds, Clark W., 1990. "Introduction," North American Review of Economics and Finance, Elsevier, vol. 1(2), pages 181-186. [Downloadable!] (restricted)
  7. Goyal, Sanjeev & Joshi, Sumit, 2003. "Networks of collaboration in oligopoly," Games and Economic Behavior, Elsevier, vol. 43(1), pages 57-85, April. [Downloadable!] (restricted)
    Other versions:
  8. Foros, Oystein & Hansen, Bjorn, 2001. "Competition and compatibility among Internet Service Providers," Information Economics and Policy, Elsevier, vol. 13(4), pages 411-425, December. [Downloadable!] (restricted)
  9. Salinger, Michael A, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 345-56, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Giovannetti, E. & Neuhoff, K. & Spagnolo, G., 2005. "Agglomeration in Internet Co-operation Peering Agreements," Cambridge Working Papers in Economics 0505, Faculty of Economics, University of Cambridge. [Downloadable!]
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