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Two Comments on the Industrial Organisation of Vertically Related Markets

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  • Chongwoo Choe

    (School of Economics, La Trobe University)

Abstract

This paper first studies the determination of final consumer price when two successive monopolists bargain over the intermediate goods price. Unlike the conventional double marginalisation result which rests on the (implicit) assumption that the upstream firm has all the bargaining power, it is shown that, as the bargaining power shifts from downstream firm to upstream firm, the equilibrium quantity (price) decreases (increases) continuously from the vertically integrated outcome to the conventional double marginalization outcome. This paper next studies the determination of retail and wholesale prices in successive Cournot oligopolies and generalizes the results of Bresnahan and Reiss (1985) on the ratio of retail to wholesale margins in successive monopolies.

Suggested Citation

  • Chongwoo Choe, 1998. "Two Comments on the Industrial Organisation of Vertically Related Markets," Working Papers 1998.03, School of Economics, La Trobe University.
  • Handle: RePEc:trb:wpaper:1998.03
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    Cited by:

    1. Gamal Atallah, 2002. "Vertical R&D Spillovers, Cooperation, Market Structure, and Innovation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(3), pages 179-209.

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    Keywords

    Monopolies;

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