IDEAS home Printed from https://ideas.repec.org/a/kap/jeczfn/v75y2002i2d10.1007_s007120200009.html

Vertical Integration and Market Foreclosure with Convex Downstream Costs

Author

Listed:
  • Pio Baake

    (Department of Economics, Humboldt University Berlin, Spandauer Strasse 1, D-10178 Berlin, Germany (e-mail: baake@wiwi.hu-berlin.de; kamecke@wiwi. hu-berlin.de; normann@wiwi.hu-berlin.de))

  • Ulrich Kamecke

    (Department of Economics, Humboldt University Berlin, Spandauer Strasse 1, D-10178 Berlin, Germany (e-mail: baake@wiwi.hu-berlin.de; kamecke@wiwi. hu-berlin.de; normann@wiwi.hu-berlin.de))

  • Hans-Theo Normann

    (Department of Economics, Humboldt University Berlin, Spandauer Strasse 1, D-10178 Berlin, Germany (e-mail: baake@wiwi.hu-berlin.de; kamecke@wiwi. hu-berlin.de; normann@wiwi.hu-berlin.de))

Abstract

In a framework with an upstream monopoly and a downstream duopoly, we analyze the impact of convex costs on the downstream level. In constrast to the case of constant marginal costs, vertical integration does not imply complete market foreclosure. While the nonintegrated downstream ¯rm receives a strictly positive amount of the intermediate good, the downstream allocation is ine±cient. However, a parametrized example indicates that competition at the downstream level may increase aggregate welfare.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Pio Baake & Ulrich Kamecke & Hans-Theo Normann, 2002. "Vertical Integration and Market Foreclosure with Convex Downstream Costs," Journal of Economics, Springer, vol. 75(2), pages 125-135, March.
    • Handle: RePEc:kap:jeczfn:v:75:y:2002:i:2:d:10.1007_s007120200009
    DOI: 10.1007/s007120200009
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s007120200009
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1007/s007120200009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giuranno, Michele G. & Scrimitore, Marcella & Stamatopoulos, Giorgos, "undated". "Vertical Integration under an Optimal Tax Policy: a Consumer Surplus Detrimental Result," ETA: Economic Theory and Applications 294195, Fondazione Eni Enrico Mattei (FEEM).
    2. Baake, Pio & Kamecke, Ulrich & Normann, Hans-Theo, 2004. "Vertical foreclosure versus downstream competition with capital precommitment," International Journal of Industrial Organization, Elsevier, vol. 22(2), pages 185-192, February.
    3. Salim, Claudia, 2009. "Optional linear input prices in vertical relations," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 258, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    4. Salim, Claudia, 2009. "Optional linear input prices in vertical relations," Discussion Papers 2009/4, Free University Berlin, School of Business & Economics.
    5. Giuranno, Michele G. & Scrimitore, Marcella & Stamatopoulos, Giorgos, 2020. "Subsidy policies and vertical integration in times of crisis: Can two virtues produce an evil?," MPRA Paper 104413, University Library of Munich, Germany.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jeczfn:v:75:y:2002:i:2:d:10.1007_s007120200009. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.