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

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Tomomichi Mizuno & Koki Arai & Chizuru Ikeda & Nobufumi Nishimura, 2009. "Vertical integration with fixed cost in an upstream market: NSK/Amatsuji merger," Economics Bulletin, AccessEcon, vol. 29(3), pages 2438-2448.
  • Handle: RePEc:ebl:ecbull:eb-09-00473
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I3-P89.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    NSK/Amatsuji merger; Vertical integration; Foreclosure;

    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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