Access to Bottleneck Inputs under Oligopoly: A Prisoners’ Dilemma?
AbstractWe analyze the incentives of vertically integrated oligopolists to concede access to their bottleneck inputs to an entrant in the downstream market. First, two vertically integrated incumbents make access price offers to an entrant that chooses which one to accept, if any. Second, firms compete on Salop’s circle. The firms may be asymmetrically located on the circle, to reflect differences in consumer shares. For some levels of asymmetry, the incumbents face a prisoners’ dilemma with respect to conceding access to their bottleneck inputs. Entry by a downstream firm may lead to lower retail prices. However, entry may also lead to higher retail prices for the access provider and for the entrant. We also consider the cases where there are several incumbents and where the entrant makes the access price offers.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 76 (2010)
Issue (Month): 3 (January)
Other versions of this item:
- Duarte Brito & Pedro Pereira, 2006. "Access to Bottleneck Inputs under Oligopoly: a Prisoners Dilemma?," Working Papers 16, Portuguese Competition Authority.
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
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- Dogan, Pinar & Bourreau, Marc & Manant, Matthieu, 2010. "A Critical Review of the â€œLadder of Investmentâ€ Approach," Scholarly Articles 4777447, Harvard Kennedy School of Government.
- Marc Bourreau & Johan Hombert & Jérôme Pouyet & Nicolas Schutz, 2009.
"Upstream Competition between Vertically Integrated Firms,"
PSE Working Papers
- Marc Bourreau & Johan Hombert & Jerome Pouyet & Nicolas Schutz, 2011. "Upstream Competition between Vertically Integrated Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 59(4), pages 677-713, December.
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