Backwards integration and strategic delegation


Hunold, Matthias ; Röller, Lars-Hendrik ; Stahl, Konrad


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URL: https://ub-madoc.bib.uni-mannheim.de/32204
URN: urn:nbn:de:bsz:180-madoc-322041
Document Type: Working paper
Year of publication: 2012
The title of a journal, publication series: ZEW Discussion Papers
Volume: 12-022
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > VWL, Mikroökonomik (Stahl Em)
Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: L22 , L40,
Keywords (English): Double marginalization , strategic delegation , vertical integration , partial ownership , common agency
Abstract: We analyze the effects of downstream firms’ acquisition of pure cash flow rights in an efficient upstream supplier when all firms compete in prices. With an acquisition, downstream firms internalize the effects of their actions on their rivals’ sales. Double marginalization is enhanced. Whereas full vertical integration would lead to decreasing, passive backwards ownership leads to increasing downstream prices and is more profitable, as long as competition is sufficiently intensive. Downstream acquirers strategically abstain from vertical control, inducing the efficient supplier to commit to high prices. All results are sustained when upstream suppliers are allowed to charge two part tariffs.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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