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Separation versus Affiliation with Partial Vertical Ownership in Network Industries

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  • Jean-Philippe Serbera

Abstract

The separation of integrated monopolies and new market entrants has changed vertical interactions between suppliers and dealers. Firms have substituted full integration with vertical restraints, leading to collusive behaviour harmful to competition. We examine how a partial vertical ownership (an affiliation) of one of the competing downstream retailers by the upstream monopoly could help internalise the production decision after a complete divestiture. Our results in a Cournot framework confirm the positive role of partial integration on firms’ profits and consumer surplus in increasing social welfare. These results are consistent with empirical studies of economies after vertical separation in network industries.

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  • Jean-Philippe Serbera, 2019. "Separation versus Affiliation with Partial Vertical Ownership in Network Industries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 26(3), pages 383-397, September.
    • Handle: RePEc:taf:ijecbs:v:26:y:2019:i:3:p:383-397
    DOI: 10.1080/13571516.2019.1602462
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    Cited by:

    1. Fang Fang & Baojun Jiang & Jiong Sun, 2023. "Partial vertical ownership in the presence of downstream competition," Production and Operations Management, Production and Operations Management Society, vol. 32(6), pages 1692-1704, June.

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