We study the competitive effects of a vertical merger in a digital industry where an integrated incumbent (closed ecosystem) competes with an open ecosystem formed by an upstream supplier (ecosystem gatekeeper) and two downstream retailers selling differentiated products. Absent innovation, the...

Consider a three-tier industry with a monopolist supplying an essential input to a manufacturer, which in turn sells its product to final consumers through two differentiated retailers. Throughout the supply chain, contracts are linear and secret. In this setting, upon receiving an...