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The Meaning of "Upstream" and "Downstream" and the Implications for Modeling Vertical Mergers


  • Salinger, Michael A


This paper discusses alternative definitions of the terms "upstream" and "downstream," and shows how each can be represented within a single model of complementary oligopoly. The different definitions have strikingly different implications for the effect of vertical mergers. While the correct definition is not obvious, the model implies an observable condition that determines the competitive effect of a vertical merger. This condition can be a guide to empirical studies of vertical mergers and integration. Copyright 1989 by Blackwell Publishing Ltd.

Suggested Citation

  • Salinger, Michael A, 1989. "The Meaning of "Upstream" and "Downstream" and the Implications for Modeling Vertical Mergers," Journal of Industrial Economics, Wiley Blackwell, vol. 37(4), pages 373-387, June.
  • Handle: RePEc:bla:jindec:v:37:y:1989:i:4:p:373-87

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    References listed on IDEAS

    1. Porter, Michael E, 1976. "Interbrand Choice, Media Mix and Market Performance," American Economic Review, American Economic Association, vol. 66(2), pages 398-406, May.
    2. Nickell, Stephen J & Metcalf, David, 1978. "Monopolistic Industries and Monopoly Profits or, Are Kellogg's Cornflakes Overpriced?," Economic Journal, Royal Economic Society, vol. 88(350), pages 254-268, June.
    3. Pagoulatos, Emilio & Sorensen, Robert, 1986. "What determines the elasticity of industry demand?," International Journal of Industrial Organization, Elsevier, vol. 4(3), pages 237-250, September.
    4. Joseph E. Stiglitz & G. Frank Mathewson (ed.), 1986. "New Developments in the Analysis of Market Structure," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690934, January.
    5. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-274, August.
    6. Connor, John M & Peterson, Everett B, 1992. "Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 157-171, June.
    7. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," Review of Economic Studies, Oxford University Press, vol. 1(3), pages 157-175.
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    Cited by:

    1. Nepelski, Daniel, 2009. "Value chain structure and �exible production technologies," MPRA Paper 26236, University Library of Munich, Germany.
    2. Arup Bose & Barnali Gupta, 2013. "Mixed markets in bilateral monopoly," Journal of Economics, Springer, vol. 110(2), pages 141-164, October.
    3. Richard S. Higgins, 1999. "Competitive vertical foreclosure," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 20(4), pages 229-237.
    4. Nicholas Economides, 1994. "The Incentive for Vertical Integration," Working Papers 94-05, New York University, Leonard N. Stern School of Business, Department of Economics.
    5. Mattoo, Aaditya, 1999. "Can no antitrust policy be better than some antitrust policy?," Policy Research Working Paper Series 2191, The World Bank.
    6. Kranz, Johann & Picot, Arnold & Roemer, Benedikt, 2011. "Unlocking the potential of the smart metering technology: How can regulation level the playing-field for new services in smart grids?," 22nd European Regional ITS Conference, Budapest 2011: Innovative ICT Applications - Emerging Regulatory, Economic and Policy Issues 52183, International Telecommunications Society (ITS).
    7. Yoonhee Tina Chang, 2004. "Relationship Banking in Bilateral Oligopoly and Asymmetric Information," Econometric Society 2004 Far Eastern Meetings 734, Econometric Society.
    8. Hecking, Harald & Panke, Timo, 2014. "Quantity-setting Oligopolies in Complementary Input Markets - the Case of Iron Ore and Coking Coal," EWI Working Papers 2014-6, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    9. Kerem Cakirer, 2007. "A Fixed Effect Model of Endogenous Integration Decision and Its Competitive Effects," Working Papers 2007-18, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    10. Scott M. Carr & Uday S. Karmarkar, 2005. "Competition in Multiechelon Assembly Supply Chains," Management Science, INFORMS, vol. 51(1), pages 45-59, January.
    11. Hecking, Harald & Panke, Timo, 2015. "The global markets for coking coal and iron ore — Complementary goods, integrated mining companies and strategic behavior," Energy Economics, Elsevier, vol. 52(PA), pages 26-38.

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