Input foreclosure under alternative entry conditions in the upstream market
AbstractWe analyze a successive vertical Cournot oligopoly model with homogeneous intermediate and final goods. Under restricted entry in both upstream and downstream markets, the input price continuously falls on a sequential merger path. Partial input foreclosure never occurs. However, when there is free entry in the upstream market, we find that the input price initially falls but eventually rises as incremental vertical mergers occur. Thus, under upstream free-entry equilibrium, the possibility of partial input foreclosure arises.
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Bibliographic InfoPaper provided by Department of Economics, University of Macedonia in its series Discussion Paper Series with number 2011_15.
Date of creation: Nov 2011
Date of revision: Nov 2011
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Input foreclosure; Vertical integration; Vertical mergers; Free entry.;
Find related papers by JEL classification:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L4 - Industrial Organization - - Antitrust Issues and Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-28 (All new papers)
- NEP-BEC-2011-11-28 (Business Economics)
- NEP-COM-2011-11-28 (Industrial Competition)
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.:
- Salinger, Michael A, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 345-56, May.
- Roman Inderst & Tommaso Valletti, 2009. "Indirect versus Direct Constraints in Markets with Vertical Integration," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(3), pages 527-546, 09.
- Matsushima, Noriaki, 2006. "Industry profits and free entry in input markets," Economics Letters, Elsevier, vol. 93(3), pages 329-336, December.
- Arghya Ghosh & Hodaka Morita, 2007. "Free entry and social efficiency under vertical oligopoly," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 541-554, 06.
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