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Vertical integration with fixed cost in an upstream market: NSK/Amatsuji merger

Listed author(s):
  • Tomomichi Mizuno


    (Competition Policy Research Center, Japan Fair Trade Commission)

  • Koki Arai


    (Competition Policy Research Center, Japan Fair Trade Commission)

  • Chizuru Ikeda


    (Graduate School of Law, Kobe University)

  • Nobufumi Nishimura


    (Faculty of Economics, University of Toyama)

In this paper, we discuss the case of the integration between NSK and Amatsuji Steel Ball by using the successive oligopoly model. We show that the integration does not lead to input foreclosure. However, it leads to customer foreclosure, if the fixed cost of a rival firm in the upstream market is high. Even in the case of customer foreclosure, since the integration reduces the final goods price, it is always beneficial for consumers.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 29 (2009)
Issue (Month): 3 ()
Pages: 2438-2448

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Handle: RePEc:ebl:ecbull:eb-09-00473
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