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Vertical Integration in the E-Commerce Sector

In: New Business and Regulatory Strategies in the Postal Sector

Author

Listed:
  • Claire Borsenberger

    (Groupe La Poste)

  • Helmuth Cremer

    (Toulouse School of Economics, University of Toulouse Capitole)

  • Denis Joram

    (Groupe La Poste)

  • Jean-Marie Lozachmeur

    (Toulouse School of Economics, CNRS, University of Toulouse Capitole)

Abstract

We study vertical integration of a retailer and an operator in the e-commerce sector. Its impact on consumers involves a tradeoff between competition and double marginalization. The competition effect dominates when the number of independent retailers and operators is sufficiently large. Even when integration of a single retailer-delivery operator pair is initially welfare improving, the resulting market structure may not be sustainable and result in an integrated monopoly that is welfare inferior to the initial independent equilibrium. Multiple integration is typically welfare superior to the integration of a single retailer-delivery operator pair. Integration is more likely to have an adverse effect on welfare when the integrated firm delivers only to rural customers.

Suggested Citation

  • Claire Borsenberger & Helmuth Cremer & Denis Joram & Jean-Marie Lozachmeur, 2018. "Vertical Integration in the E-Commerce Sector," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), New Business and Regulatory Strategies in the Postal Sector, pages 143-160, Springer.
  • Handle: RePEc:spr:topchp:978-3-030-02937-1_12
    DOI: 10.1007/978-3-030-02937-1_12
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    References listed on IDEAS

    as
    1. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919, February.
    2. Rey, Patrick & Tirole, Jean, 2007. "A Primer on Foreclosure," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 33, pages 2145-2220, Elsevier.
    3. Oecd, 2004. "Competition Policy in Subsidies and State Aid," OECD Journal: Competition Law and Policy, OECD Publishing, vol. 6(1), pages 109-173.
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    More about this item

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services

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