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Vertical Foreclosure, Technological Choice and Entry on the Intermediate Market

Author

Listed:
  • Avenel, E.
  • Barlet, C.

Abstract

This paper analyzes the profitability of vertical integration for an upstream monopoly facing a potential competitor. We show that it depends on the technology used by the firm when it integrates. We distinguish two types of technologies : standard technologies used by non-integrated firms, and non-standard technologies, reserved to integrated firms and implying the complete foreclosure of non-integrated firms.

Suggested Citation

  • Avenel, E. & Barlet, C., 2000. "Vertical Foreclosure, Technological Choice and Entry on the Intermediate Market," Papiers d'Economie Mathématique et Applications 2000.18, Université Panthéon-Sorbonne (Paris 1).
    • Handle: RePEc:fth:pariem:2000.18
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    References listed on IDEAS

    as
    1. Géarard Gaudet & Ngo Van Long, 1996. "Vertical Integration, Foreclosure, and profits in the Presence of Double Marginalization," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(3), pages 409-432, September.
    2. 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.
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    Citations

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    Cited by:

    1. Allain, Marie-Laure & Chambolle, Claire & Rey, Patrick & Teyssier, Sabrina, 2021. "Vertical integration as a source of hold-up: An experiment," European Economic Review, Elsevier, vol. 137(C).
    2. Lemarie, Stephane & Ramani, Shyama, 2003. "Analysis Of The Vertical Relationships Between Seed And Biotech Companies," 2003 Annual meeting, July 27-30, Montreal, Canada 22041, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Éric Avenel & Stéphane Caprice, 2018. "Collusion et possibilité d’entrée en aval dans une industrie verticalement intégrée," Revue économique, Presses de Sciences-Po, vol. 69(1), pages 5-28.
    4. Allain, Marie-Laure & Chambolle, Claire & Rey, Patrick & Teyssier, Sabrina, 2021. "Vertical integration as a source of hold-up: An experiment," European Economic Review, Elsevier, vol. 137(C).
    5. Roberto Hernán González & Praveen Kujal, 2012. "Vertical integration, market foreclosure and quality investment," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(1), pages 1-20, April.
    6. Milliou, Chrysovalantou, 2020. "Vertical integration without intrafirm trade," Economics Letters, Elsevier, vol. 192(C).
    7. Michiel Bijlsma & Viktoria Kocsis & Victoria Shestalova & Gijsbert Zwart, 2008. "Vertical foreclosure: a policy framework," CPB Document 157, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Pouyet, Jérôme & Hombert, Johan & Schutz, Nicolas, 2007. "Wholesale Markets in Telecommunications," CEPR Discussion Papers 6224, C.E.P.R. Discussion Papers.
    9. Ramón Faulí-Oller & Joel Sandonís Díez, 2003. "On The Competitive Effects Of Vertical Integration Under Product Differentiation," Working Papers. Serie AD 2003-31, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    10. Inderst, Roman & Valletti, Tommaso, 2011. "Incentives for input foreclosure," European Economic Review, Elsevier, vol. 55(6), pages 820-831, August.
    11. Laurent Linnemer, 2000. "When Backward Integration by a Dominant Firm Improves Welfare," Working Papers 2000-42, Center for Research in Economics and Statistics.
    12. Éric Avenel & Stéphane Caprice, 2012. "Collusion and downstream entry in a vertically integrated industry," Economics Working Paper Archive (University of Rennes & University of Caen) 201208, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    13. Roman Inderst & Tommaso M. Valletti, 2007. "Market Analysis In The Presence Of Indirect Constraints And Captive Sales," Journal of Competition Law and Economics, Oxford University Press, vol. 3(2), pages 203-231.
    14. Lin, Hui-Lin & Hsiao, Yi-Chi & Lin, Eric S., 2015. "The choice between standard and non-standard FDI production strategies for Taiwanese multinationals," Research Policy, Elsevier, vol. 44(1), pages 283-293.

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    More about this item

    Keywords

    TECHNOLOGY ; MONOPOLIES ; COMPETITION;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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