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On the pro-competitive effects of passive partial backward ownership

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  • Alipranti, Maria
  • Skartados, Panagiotis

Abstract

We consider a vertically related market in which an upstream monopolist supplier trades, via interim observable two-part tariff contracts, with two differentiated goods' downstream Cournot competitors. We show that passive partial backward ownership (PPBO) may be pro-competitive and welfare enhancing. PPBO exacerbates the upstream's commitment problem and yields lower wholesale prices, and higher industry output, consumers surplus, and welfare than in the absence of PPBO.

Suggested Citation

  • Alipranti, Maria & Skartados, Panagiotis, 2021. "On the pro-competitive effects of passive partial backward ownership," UC3M Working papers. Economics 33271, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:33271
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    Cited by:

    1. Ricardo Gonçalves, 2023. "Backward Partial Vertical Integration Through Private Placement," Journal of Industry, Competition and Trade, Springer, vol. 23(3), pages 101-122, December.
    2. Emmanuel Petrakis & Panagiotis Skartados, 2022. "First-mover advantage reversals under passive cross forward ownership in vertically related markets," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(2), pages 303-311, October.

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    More about this item

    Keywords

    Passive Partial Backward Ownership;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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