In this paper we address the following question: is it more profitable, for an entrant in a differentiatedmarket, to acquire an existing firm than to compete? We illustrate the answer by considering competition inthe banking sector.....

We study the effects of integration of asymmetric complements when they are vertically differentiated. While confirming the standard effects of integration, namely the internalization of the double marginalization externality and the reduction of competition, we point out a new positive quality...