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Downstream competition, foreclosure, and vertical integration

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  • G. Chemla

Abstract

This paper analyzes the impact of competition among downstream firms on an upstream firm's payoff and on its incentives to vertically integrate when firms on both segments negotiate optimal contracts. The author argues that tougher competiton decreases the downstream industry profit, but improves the upstream firm's negotiation position.
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Suggested Citation

  • G. Chemla, 1999. "Downstream competition, foreclosure, and vertical integration," THEMA Working Papers 99-18, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:99-18
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    File URL: http://www.u-cergy.fr/IMG/documents//99-18Chemla.pdf
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    References listed on IDEAS

    as
    1. Oliver Hart & Jean Tirole, 1990. "Vertical Integration and Market Foreclosure," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1990 Micr), pages 205-286.
    2. Kai-Uwe Kuhn & Xavier Vives, 1999. "Excess Entry, Vertical Integration, and Welfare," RAND Journal of Economics, The RAND Corporation, vol. 30(4), pages 575-603, Winter.
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    More about this item

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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