کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
5057928 | 1476612 | 2017 | 4 صفحه PDF | دانلود رایگان |
- We compare the outcomes of vertical integration and vertical separation with network externalities.
- Integration has the advantage of avoiding double-margin distortion.
- Separation has the advantage of increasing network externalities.
- When both products are sufficiently close substitutes, vertical separation is more efficient than vertical integration.
Considering the interplay between network externalities and the degree of product substitutability in a vertical structure, we compare the outcomes of vertical integration and vertical separation. In contrast to previous results, we show that when both products are sufficiently close substitutes, there is a threshold level of the network externality parameter, beyond which vertical separation is more efficient than vertical integration. This is due to the internalization of the network externality by a multiproduct monopolist, which, in the balance between the extensive and intensive margin, leads to higher output prices.
Journal: Economics Letters - Volume 151, February 2017, Pages 115-118