Forward Vertical Integration: The Fixed-Proportion Case Revisited
AbstractAssuming a fixed-proportion downstream production technology, partial forward integration by an upstream monopolist may be observed whether the monopolist is advantaged or disadvantaged cost-wise relative to fringe firms in the downstream market. Integration need not induce cost predation and the fringe firms’ margin may even increase. The output price falls and welfare unambiguously rises.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 65.
Date of creation: Sep 2006
Date of revision:
Vertical integration; cost predation; cost asymmetries;
Other versions of this item:
- Olivier Bonroy & Bruno Larue, 2007. "Forward Vertical Integration: The Fixed-Proportion Case Revisited," Economics Bulletin, AccessEcon, vol. 12(25), pages 1-9.
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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