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Oligopolistic Business to Business E-Market and Welfare

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  • Reiko Aoki

    (University of Auckland)

Abstract

We examine the effect of an oligopolistic upstream electronic market on upstream and downstream prices. The analysis highlights the two sources of competition that a firm that source from an electronic market (e- market firm) face: competition with less efficient firms that source traditionally (t-market firms) and competition among e-market firms. When size of the upstream e-market is small, the first effect dominates and there is higher profits with lower upstream prices in the e-market. When size of the e-market becomes very large, the second effect makes e- market firms less profitable than t-market firms even though e-market price may start to increase (as market size increases). As consequence, e-market will never completely eliminate the upstream t-market and downstream price can increase when e-market grows beyond a certain size.

Suggested Citation

  • Reiko Aoki, 2001. "Oligopolistic Business to Business E-Market and Welfare," Industrial Organization 0012004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpio:0012004
    Note: Type of Document - Text in pdf, Figures in Word; prepared on IBM PC - PC-TEX; to print on HP; pages: 14 + 8 ; figures: request from author. Text in pdf. Figures in Word (also available from author)
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0012/0012004.pdf
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    References listed on IDEAS

    as
    1. Morton I. Kamien & Yair Tauman, 1986. "Fees Versus Royalties and the Private Value of a Patent," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(3), pages 471-491.
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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