Forward Vertical Integration: The Fixed-Proportion Case Revisited

Assuming a fixed-proportion downstream production technology, partial forward integration by an upstream monopolist may be observed whether the monopolist is advantaged or disadvantaged cost-wise relative to fringe firms in the downstream market. Integration need not induce cost predation and the fringe firms’ margin may even increase. The output price falls and welfare unambiguously rises.

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Year of publication:	2006-09
Authors:	Bonroy, Olivier ; Larue, Bruno
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Vertical integration \| cost predation \| cost asymmetries

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Extent:	application/pdf
Series:	MPRA Paper.
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/10005787037