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Asymmetric Complements in a Vertically Differentiated Market: Competition or Integration?

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  • Ornella Tarola
  • Cecilia Vergari

Abstract

type="main"> We study the effects of integration of asymmetric complements when they are vertically differentiated. While confirming the standard effects of integration, namely the internalization of the double marginalization externality and the reduction of competition, we point out a new positive quality effect, due to an increase in the average quality of the goods on sale. We also characterize the conditions under which integration turns out to be optimal for both firms' and consumers. We thus provide valuable directions for competition agencies when considering the joint ownership in vertically differentiated markets.

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  • Ornella Tarola & Cecilia Vergari, 2015. "Asymmetric Complements in a Vertically Differentiated Market: Competition or Integration?," Manchester School, University of Manchester, vol. 83(1), pages 72-100, January.
    • Handle: RePEc:bla:manchs:v:83:y:2015:i:1:p:72-100
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    References listed on IDEAS

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    Cited by:

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    2. Takanori Adachi & Takeshi Ebina & Makoto Hanazono, 2017. "Endogenous Product Boundary," Manchester School, University of Manchester, vol. 85(1), pages 13-40, January.

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