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Symbiotic Production and Downstream Market Competition

Author

Listed:
  • Wen-Chung Guo

    ()

  • Fu-Chuan Lai

    ()

  • Chorng-Jian Liu

    ()

  • Chao-Cheng Mai

    ()

Abstract

It is well known that the double marginalization problem in the vertical relation can be eliminated by collusion, but it is undesirable because of the monopoly pricing outcome. This study addresses the role of downstream market competition under symbiotic production and demonstrates that incorporating different types of competition in product markets will partially eliminate inefficiency caused by double marginalization. It suggests that introducing callback services or internet telephones creates an environment similar to downward market competition in the output market; hence, it is observed that international tariffs are significantly reduced. Copyright International Atlantic Economic Society 2012

Suggested Citation

  • Wen-Chung Guo & Fu-Chuan Lai & Chorng-Jian Liu & Chao-Cheng Mai, 2012. "Symbiotic Production and Downstream Market Competition," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 40(3), pages 329-340, September.
  • Handle: RePEc:kap:atlecj:v:40:y:2012:i:3:p:329-340
    DOI: 10.1007/s11293-012-9322-6
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    References listed on IDEAS

    as
    1. Economides, Nicholas & Salop, Steven C, 1992. "Competition and Integration among Complements, and Network Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 105-123, March.
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    6. Sandbach, Jonathan, 1996. "International telephone traffic, callback and policy implications," Telecommunications Policy, Elsevier, vol. 20(7), pages 507-515, August.
    7. Lam, Pun-Lee, 1997. "Erosion of monopoly power by call-back. Lessons from Hong Kong," Telecommunications Policy, Elsevier, vol. 21(8), pages 693-695, October.
    8. Irmen, Andreas, 1997. "Mark-up pricing and bilateral monopoly," Economics Letters, Elsevier, vol. 54(2), pages 179-184, February.
    9. Chorng-Jian Liu & Chao-Cheng Mai & Fu-Chuan Lai & Wen-Chung Guo, 2010. "Pollution, Factor Ownerships, and Emission Taxes," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(2), pages 209-216, June.
    10. Greenhut, M L & Ohta, H, 1979. "Vertical Integration of Successive Oligopolists," American Economic Review, American Economic Association, vol. 69(1), pages 137-141, March.
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    12. Brueckner, Jan K., 2001. "The economics of international codesharing: an analysis of airline alliances," International Journal of Industrial Organization, Elsevier, vol. 19(10), pages 1475-1498, December.
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    More about this item

    Keywords

    Symbiotic production; Double marginalization; Downstream market competition; L11; L13; L22;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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