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Partial Vertical Ownership with Asymmetric Information

Author

Listed:
  • Ricardo Gonçalves

    (Católica Porto Business School, Universidade Catolica Portuguesa)

  • Peyman Khezr

    (School of Economics, Finance and Marketing, RMIT University, Australia.)

  • Flavio Menezes

    (School of Economics, University of Queensland, Brisbane, Australia)

Abstract

We examine the role of asymmetric information about costs on the impact of partial (non-controlling) vertical integration on competition. We show that Greenlee and Raskovich (2006)’s invariance result that total downstream quantity (and, therefore, competition) is not impacted by such acquisitions holds in the case of privately known marginal costs and symmetric ownership shares. This invariance result provides a possible explanation for why partial acquisitions where downstream firms own equal shares in an upstream firm with market power are so uncommon.

Suggested Citation

  • Ricardo Gonçalves & Peyman Khezr & Flavio Menezes, 2020. "Partial Vertical Ownership with Asymmetric Information," Discussion Papers Series 634, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uq2004:634
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    File URL: https://economics.uq.edu.au/files/39706/634.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Vertical integration; partial acquisition; asymmetric information.;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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