Upstream market foreclosure
AbstractThis paper investigates how an incumbent monopolist can weaken potential rivals or deter entry in the output market by manipulating the access of these rivals in the input market. We analyze two polar cases. In the ﬁrst one, the input market is assumed to be competitive with the input being supplied inelastically. We show that this situation opens the door to entry deterrence. Then, we assume that the input is supplied by a single seller who chooses the input price. In this case, we show that entry deterrence can be reached only through merger with the seller of the input.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2006043.
Date of creation: 00 May 2006
Date of revision:
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entry deterrence; foreclosure; overinvestment; bilateral monopoly;
Other versions of this item:
- Jean j., GABSZEWICZ & Skerdilajda, ZANAJ, 2006. "Upstream market foreclosure," Discussion Papers (ECON - DÃ©partement des Sciences Economiques) 2006024, Université catholique de Louvain, Département des Sciences Economiques.
- D20 - Microeconomics - - Production and Organizations - - - General
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
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