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The impact of vertical integration on losses from collusion

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  • Bet, Germán
  • Cui, Shana
  • Sappington, David E.M.

Abstract

Upstream collusion that increases the price of an input can harm an independent downstream producer (D). We ask whether this harm is more or less pronounced when D’s downstream rival is a vertically integrated producer. We find that such vertical integration increases D’s loss from collusion when D is not a particularly strong competitor. However, when D is a sufficiently strong competitor, vertical integration can reduce D’s loss from collusion when price competition prevails downstream.

Suggested Citation

  • Bet, Germán & Cui, Shana & Sappington, David E.M., 2021. "The impact of vertical integration on losses from collusion," International Journal of Industrial Organization, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:indorg:v:77:y:2021:i:c:s0167718721000497
    DOI: 10.1016/j.ijindorg.2021.102756
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    References listed on IDEAS

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    3. Yu, Haipeng & Cheng, Xiaoke & Sun, Qian & Shen, Xiaotian, 2025. "Does vertical integration reduce the cost of equity?," International Review of Financial Analysis, Elsevier, vol. 97(C).

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