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Extending Market Power through Vertical Integration

Author

Listed:
  • de Fontenay, C.
  • Gans, J.S.

Abstract

This paper derives a model of vertical integration when it is difficult to write binding long-term supply price contracts. Thus, a vertical separated monopolist is vulnerable to hold-up. Without integration, the authors demonstrate that a bottleneck monopolist has an incentive to encourage more firms in a related segment than would arise in a pure monopoly.

Suggested Citation

  • de Fontenay, C. & Gans, J.S., 1999. "Extending Market Power through Vertical Integration," Papers 99/2, New South Wales - School of Economics.
    • Handle: RePEc:fth:nesowa:99/2
    as

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    Citations

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    Cited by:

    1. Joshua S. Gans & Scott Stern, 2000. "Incumbency and R&D Incentives: Licensing the Gale of Creative Destruction," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(4), pages 485-511, December.
    2. King, S.P., 2000. "Does Structure Dominate Regulation? The Case of an Input Monopolist," Department of Economics - Working Papers Series 767, The University of Melbourne.
    3. de Fontenay, Catherine C. & Gans, Joshua S., 2004. "Can vertical integration by a monopsonist harm consumer welfare?," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 821-834, June.

    More about this item

    Keywords

    MONOPOLIES ; MARKET STRUCTURE ; VERTICAL INTEGRATION;
    All these keywords.

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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