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Some Simple Analytics of Vertically Linked Markets

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  • Joseph Farrell

    (University of California, Berkeley)

Abstract

A firm may have an incentive to encourage competition and/or efficiency in an “aftermarket” that is vertically linked to a “foremarket” in which it participates. I describe a strong form of this potential incentive, and then explore how it is weakened in plausible circumstances. Some applications to net neutrality are described.

Suggested Citation

  • Joseph Farrell, 2017. "Some Simple Analytics of Vertically Linked Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(4), pages 431-440, June.
    • Handle: RePEc:kap:revind:v:50:y:2017:i:4:d:10.1007_s11151-017-9571-2
    DOI: 10.1007/s11151-017-9571-2
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    References listed on IDEAS

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    1. Michael Waldman, 2010. "Competition, Monopoly, and Aftermarkets," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 26(1), pages 54-91, April.
    2. Sumit Agarwal & Souphala Chomsisengphet & Neale Mahoney & Johannes Stroebel, 2015. "Regulating Consumer Financial Products: Evidence from Credit Cards," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(1), pages 111-164.
    3. Severin Borenstein & Jeffrey K. Mackie‐Mason & Janet S. Netz, 2000. "Exercising Market Power in Proprietary Aftermarkets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(2), pages 157-188, June.
    4. André Veiga & E. Glen Weyl, 2016. "Product Design in Selection Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 1007-1056.
    5. Cabral, Luís, 2014. "Aftermarket power and foremarket competition," International Journal of Industrial Organization, Elsevier, vol. 35(C), pages 60-69.
    6. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
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    Cited by:

    1. Hooton, Christopher Alex, 2020. "Testing the economics of the net neutrality debate," Telecommunications Policy, Elsevier, vol. 44(5).

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