A model of externalities with sequential location choice is developed. The first mover decides on location before it knows the identity of the second mover. Joint location leads to a negative externality. The court, having limited information, allocates property rights over the externality based...

The hypothesis that vertically integrated firms have an incentive to foreclose the input market because foreclosure raises its downstream rivals' costs is the subject of much controversy in the theoretical industrial organization literature. A powerful argument against this hypothesis is that,...