This paper analyzes a simple, repeated game of simultaneous entry and pricing. We report a surprising property of the symmetric equilibrium solution: If the number of potential competitors is increased above two, the market breaks down with higher probability, and the competitive outcome becomes...

This paper shows that vertical foreign direct investment will reduce prices but the aggregate welfare effect is unambiguously positive only under free market entry. Using a standard model of imperfect competition, we develop this result by considering two different cases. In the first case, the...

This paper shows that vertical foreign direct investemt will reduce prices but the aggregate welfare effect is unambiguaously positive only under free market entry. Using a standard model of imperfect competition, we develop this result by considering two different cases. In the first case, the...

The central purpose of this paper is to examine firms' vertical integration decisions as a consequence of strategic choices within an explicit market environment. I show that a unique equilibrium number of unintegrated downstream firms exists when the intermediate-good market is imperfectly...

Die Arbeit untersucht den von der ?Arbeitgruppe Netznutzung Strom der Kartellbehörden des Bundes und der Länder? vorgeschlagenen Subtraktionstest, mit dessen Hilfe missbräuchlich überhöhte Netznutzungsentgelte für die Durchleitung von Strom identifiziert werden sollen. Dabei kommen wir zu...

The paper deals with the subtraction rule, which has been proposed by the ?working group security of supply in service of the cartel offices of the federal republic and the states? as an instrument to identify improperly inflated network access charges in the electricity industry. We analyze...

According to Stigler (1951), vertical disintegration should be the typical development in growing industries, vertical integration in declining industries. The basic argument is that firms will spin off production stages subject to increasing returns to scale in response to market growth. This...