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Forward Vertical Integration: The Fixed-Proportion Case Revisited

  • Bonroy, Olivier
  • Larue, Bruno

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 fringe firms’ margin may even increase. The output price falls and welfare unambiguously rises.

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File URL: http://mpra.ub.uni-muenchen.de/65/1/MPRA_paper_65.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 65.

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Date of creation: Sep 2006
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Handle: RePEc:pra:mprapa:65
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  1. Riordan, M.H., 1996. "Anticompetitive Vertical Integration by a Dominant Firm," Papers 64, Boston University - Industry Studies Programme.
  2. Blair, Roger D. & Cooper, Thomas E. & Kaserman, David L., 1985. "A note on vertical integration as entry," International Journal of Industrial Organization, Elsevier, vol. 3(2), pages 219-229, June.
  3. Quirmbach, Herman C, 1992. "Sequential Vertical Integration," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 1101-11, August.
  4. Salop, Steven C & Scheffman, David T, 1987. "Cost-Raising Strategies," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 19-34, September.
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