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System goods, tying and vertical foreclosure

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  • Eric AVENEL

    (Univ Rennes, CNRS, CREM – UMR6211, F-35000 Rennes France)

Abstract

With the development of e-commerce, upstream firms have the possibility to sell their products on BtoC markets. I explore the consequences of this observation on the analysis of vertical integration and more specifically vertical foreclosure. I consider the same industry structure as in OSS (1990), but I allow the integrated firm to sell the intermediate good either on a BtoB market (as assumed by OSS) and/or on a BtoC market (in which case it is in fact no longer an intermediate good). I also consider the possibility that the competing producer of the intermediate good sells it on a BtoC market. In this enriched strategic framework, the firm has to decide on how to combine vertical foreclosure and tying, which sheds new light on the relation between these two possibly anticompetitive practices.

Suggested Citation

  • Eric AVENEL, 2024. "System goods, tying and vertical foreclosure," Economics Working Paper Archive (University of Rennes & University of Caen) 2024-03, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:2024-03
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    More about this item

    Keywords

    Vertical foreclosure; tying; BtoB; BtoC.;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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