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Forward vertical integration : the fixed-proportion case revisited

Author

Listed:
  • Olivier Bonroy

    (GAEL - Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique)

  • Bruno Larue

    (ULaval - Université Laval [Québec])

Abstract

Assuming a fixed-proportion downstream production technology, partial forward integration by an upstream monopolist may be observed whether the monopolist is advantaged or disadvantaged cost-wise relative to fringe firms in the downstream market. Integration need not induce cost-predation and the profits of the fringe may increase. The output price falls and welfare unambiguously rises.

Suggested Citation

  • Olivier Bonroy & Bruno Larue, 2007. "Forward vertical integration : the fixed-proportion case revisited," Post-Print hal-02653842, HAL.
    • Handle: RePEc:hal:journl:hal-02653842
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    Cited by:

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    2. Bruno Larue & Olivier Bonroy, 2009. "Seemingly Competitive Food Retail Regulations: Who Do They Really Help?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(3), pages 305-324, September.

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    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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