Competitive E?ects of Vertical Integration with Downstream Oligopsony and Oligopoly

Loertscher, Simon; Reisinger, Markus (October 2009): Competitive E?ects of Vertical Integration with Downstream Oligopsony and Oligopoly. SFB/TR 15 Discussion Paper No. 278

Abstract

We analyze the competitive e?ects of backward vertical integration by a partially vertically integrated ?rm that competes with non-integrated ?rms both upstream and downstream. We show that vertical integration is procompetitive under fairly general conditions. It can be anticompetitive only if the ex ante degree of integration is relatively large. Interestingly, vertical integration is more likely to be anticompetitive if the industry is less concentrated. These results are in line with recent empirical evidence. In addition, we show that even when vertical integration is procompetitive, it is not necessarily welfare enhancing.

• Item Type: Paper (Discussion Paper)
• Keywords: Vertical Integration, Downstream Oligopsony, Downstream Oligopoly, Competition Policy, Capacity Choice
• Faculties: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A4 - Unvollständige Verträge, Marktinteraktion und soziale Vergleichsprozesse; Economics; Economics > Chairs > Chair of Dynamic Economic Theory (closed)
• Subjects: 300 Social sciences > 330 Economics
• Language: English