IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v59y2011i3p506-527.html
   My bibliography  Save this article

Vertical Mergers, Foreclosure And Raising Rivals' Costs – Experimental Evidence

Author

Listed:
  • HANS THEO NORMANN

Abstract

The hypothesis that vertically integrated firms have an incentive to foreclose the input market because foreclosure raises its downstream rivals' costs is the subject of much controversy in the theoretical industrial organization literature. A powerful argument against this hypothesis is that, absent commitment, such foreclosure cannot occur in Nash equilibrium. The laboratory data reported in this paper provide experimental evidence in favor of the hypothesis. Markets with a vertically integrated firm are signifiantly less competitive than those where firms are separate. While the experimental results violate the standard equilibrium notion, they are consistent with the quantalresponse generalization of Nash equilibrium.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Hans Theo Normann, 2011. "Vertical Mergers, Foreclosure And Raising Rivals' Costs – Experimental Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 59(3), pages 506-527, September.
  • Handle: RePEc:bla:jindec:v:59:y:2011:i:3:p:506-527
    DOI: j.1467-6451.2011.00463.x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1467-6451.2011.00463.x
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Möllers, Claudia, 2016. "Reputation and foreclosure with vertical integration: Experimental evidence," DICE Discussion Papers 232, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Benli, Erman & Emin-Benli, Hande, 2015. "The political economy of margin squeeze liability in the Turkish telecommunications market: A comparative assessment," Utilities Policy, Elsevier, vol. 37(C), pages 104-110.
    3. repec:clg:wpaper:2015-21 is not listed on IDEAS

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jindec:v:59:y:2011:i:3:p:506-527. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.