Equilibrium downstream mark-up and upstream free entry

We consider a successive Cournot oligopoly model where firms freely enter into the upstream market. We show that, under specific conditions, a higher number of downstream firms can lead to a higher mark-up in the downstream market. Although downstream market power may increase, consumer prices still decrease with the number of downstream firms implying that higher market power does not necessarily imply lower consumer surplus.

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Year of publication:	2014-09
Authors:	Pinopoulos, Ioannis N.
Subject:	Vertical relations \| Cournot competition \| Free entry \| Market Power

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Series:	Discussion Paper Series.
Type of publication:	Book / Working Paper
Classification:	L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010937229