Incentives for Sabotage in Vertically Related Industries
AbstractWe show that the incentives a vertically integrated supplier may have to disadvantage or "sabotage" the activities of downstream rivals vary with both the type of sabotage and the nature of downstream competition. Cost-increasing sabotage is typically profitable under both Cournot and Bertrand competition. In contrast, demand-reducing sabotage is often profitable under Cournot competition, but unprofitable under Bertrand competition. Incentives for sabotage can vary non-monotonically with the degree of product differentiation.
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Bibliographic InfoPaper provided by Department of Economics, University of Missouri in its series Working Papers with number 0404.
Length: 39 pgs.
Date of creation: 16 Dec 2004
Date of revision: 16 Dec 2004
Publication status: Forthcoming in Journal of Regulatory Economics (2006)
Regulation; Vertical Integration; Access Pricing; Sabotage;
Other versions of this item:
- David Mandy & David Sappington, 2007. "Incentives for sabotage in vertically related industries," Journal of Regulatory Economics, Springer, vol. 31(3), pages 235-260, June.
- C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-01-02 (All new papers)
- NEP-COM-2005-01-02 (Industrial Competition)
- NEP-REG-2005-01-02 (Regulation)
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