Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5078559 | International Journal of Industrial Organization | 2008 | 19 Pages |
Abstract
This paper examines the interplay of endogenous vertical integration and cost-reducing downstream investment in successive oligopoly. Analyzing a linear Cournot model, we establish the following key results: (i) Vertical integration increases own investment and decreases competitor investment (intimidation effect). (ii) Asymmetric integration is a non-degenerate equilibrium outcome. (iii) Compared to a benchmark model without investment, complete vertical separation is a less likely outcome. We argue that these findings generalize beyond the linear Cournot model under reasonable assumptions.
Related Topics
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Economics and Econometrics
Authors
Stefan Buehler, Armin Schmutzler,