Strategic behavior downstream and the incentive to integrate: a spatial model with delivered pricing

Article Abstract:

Previous research has failed to tackle some of the private and social incentives for the use of vertical integration in spatial models. In the case of higher transport expenses in a downstream monopoly that serves customers on a unit line and buys an input from an upstream monopoly, the upstream firm is forced to lower its input price rather than experience a decrease in sales. This lowers overall welfare and profit since downstream profit is increased by the lower input price, leading to private and social incentives for vertical integration.

Models, Vertical integration

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A note on N. Economides: the incentive for non-price discrimination by an input monopolist

Article Abstract:

The claim that a vertically integrated input monopolist always has the incentive to increase the cost of the rivals to its subsidiary in a discriminatory way is discussed. It is argued that there are no incentives for raising rivals' costs.

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Comment on "A note on N. Economides: the incentive for non-price discrimination by an input monopolist," by Mats Bergman

Article Abstract:

Issues concerning the incentive for non-price discrimination of a monopolist in an input market who also sells in an oligopoly downstream market via a subsidiary are discussed.

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