Incentive to encourage downstream competition under bilateral oligopoly
Consider the contracting problem of an input supplier dealing with several firms that compete in an output market. We show that, contrary to the key result of the previous literature, an input supplier's profit can increase with the number of downstream firms if the upstream firm is not a monopolist but instead competes with an alternative inferior supplier.
Volume (Year): 12 (2005)
Issue (Month): 9 ()
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- G. Chemla, 1999.
"Downstream competition, foreclosure, and vertical integration,"
THEMA Working Papers
99-18, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Chemla, G., 1999. "Downstream Competition, Foreclosure, and Vertical Integration," Papers 99-18, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
- McAfee, R. Preston & Schwartz, Marius, 1995. "The non-existence of pairwise-proof equilibrium," Economics Letters, Elsevier, vol. 49(3), pages 251-259, September.
- Chemla, Gilles, 2003. "Downstream Competition, Foreclosure, and Vertical Integration," Economics Papers from University Paris Dauphine 123456789/6313, Paris Dauphine University.
- Ilya Segal & Michael D. Whinston, 2003. "Robust Predictions for Bilateral Contracting with Externalities," Econometrica, Econometric Society, vol. 71(3), pages 757-791, 05.
- Gilles Chemla, 2003. "Downstream Competition, Foreclosure, and Vertical Integration," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(2), pages 261-289, 06.
- McAfee, R Preston & Schwartz, Marius, 1994. "Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity, and Uniformity," American Economic Review, American Economic Association, vol. 84(1), pages 210-30, March.
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