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Bertrand competition in vertically related markets

Author

Listed:
  • Tomomichi Mizuno

    (Graduate School of Economics, Kobe University)

  • Kazuhiro Takauchi

    (Faculty of Business and Commerce, Kansai University / Research Fellow, Graduate School of Economics, Kobe University)

Abstract

We build a successive Bertrand model with homogenous good. We show that increasing the pro- duction efficiency of upstream industry can reduce upstream Firms' profits. We also show that increasing the production efficiency of downstream industry may reduce downstream Firms' prof- its. Hence, an industrial policy that aims at improving production efficiency may be undesirable for Firms.

Suggested Citation

  • Tomomichi Mizuno & Kazuhiro Takauchi, 2022. "Bertrand competition in vertically related markets," Discussion Papers 2208, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:2208
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    References listed on IDEAS

    as
    1. Marie‐Laure Cabon‐Dhersin & Nicolas Drouhin, 2014. "Tacit Collusion in a One‐Shot Game of Price Competition with Soft Capacity Constraints," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(2), pages 427-442, June.
    2. Mukherjee, Arijit, 2019. "Profit raising entry in a vertical structure," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    3. Matsushima, Noriaki, 2006. "Industry profits and free entry in input markets," Economics Letters, Elsevier, vol. 93(3), pages 329-336, December.
    4. David Flath, 2012. "Are There Any Cournot Industries in Japan?," Japanese Economy, Taylor & Francis Journals, vol. 39(2), pages 3-36.
    5. Michael A. Salinger, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(2), pages 345-356.
    6. Tomomichi Mizuno & Kazuhiro Takauchi, 2020. "Optimal Export Policy With Upstream Price Competition," Manchester School, University of Manchester, vol. 88(2), pages 324-348, March.
    Full references (including those not matched with items on IDEAS)

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