The Entry Incentives of Complementary Producers: A Simple Model with Implications for Antitrust Policy
AbstractWe model competition between two firms in a vertical upstream-downstream relationship. Each firm can pay a sunk cost to enter the other’s market. For equilibria in which both firms enter, the downstream price can be lower than the joint profit maximizing level, and coordination (e.g., through merger) is anticompetitive.
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Bibliographic InfoPaper provided by Department of Justice, Antitrust Division in its series EAG Discussions Papers with number 200907.
Length: 8 pages
Date of creation: Nov 2009
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-22 (All new papers)
- NEP-COM-2010-05-22 (Industrial Competition)
- NEP-IND-2010-05-22 (Industrial Organization)
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