The effects of vertical integration on competing input suppliers

When a downstream firm buys an input supplier, it can reduce its costs of using that input. Other input suppliers typically respond by pricing more aggressively, given the demand reduction, which tends to lower input supply costs to other firms. Thus, a vertical merger may lower rivals' costs instead of raising them.

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Year of publication:	1999
Authors:	McAfee, R. Preston
Published in:	Economic Review. - Federal Reserve Bank of Cleveland. - 1999, Q I, p. 2-8
Publisher:	Federal Reserve Bank of Cleveland
Subject:	Competition

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Source:	RePEc - Research Papers in Economics

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