In some cases, complementary products are sold to different sets of agents to aid in transactions between them. In the context of a simplified model, this article shows that a monopolist has an incentive to integrate into and foreclose other sellers of a complementary product used in fixed proportions with the monopolized product, but which is sold to different consumers. While these latter consumers are made worse off by integration and leverage, output is expanded and the monopolist's original consumers are made better off. The effect of integration and leverage on overall welfare is uncertain. I illustrate this model with an example involving trucking fleet cards (sold to trucking companies) and fuel desk point-of-sale systems (sold to truck stops) that are used in conjunction when diesel fuel is purchased.
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Volume (Year): 70 (2004) Issue (Month): 4 (April) Pages: 893-904 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies L40 - Industrial Organization - - Antitrust Issues and Policies - - - General L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
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