We propose a simple model of a partially integrated industry which explicitely takes into account persistant production cost differences across upstream firms, such as one might observe in natural resource industries. The model allows us to highlight the respective roles of strategic considerations and of cost considerations in the determination of an integrated firm'interaction with the non-integrated sector of the industry and, in the end, on its relative upstream- downstream specialization. Stylized facts from the oil industry are used to illustrate the type of behaviour one might expect in this context.
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Paper provided by Laval - Recherche en Politique Economique in its series Papers with number
9604.
Find related papers by JEL classification: L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
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.:
Salop, Steven C & Scheffman, David T, 1983.
"Raising Rivals' Costs,"
American Economic Review,
American Economic Association, vol. 73(2), pages 267-71, May.
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