Vertical integration with complementary inputs


Reisinger, Markus ; Tarantino, Emanuele



DOI: https://doi.org/10.2139/ssrn.1743483
URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_i...
Additional URL: http://citeseerx.ist.psu.edu/viewdoc/download?doi=...
Document Type: Working paper
Year of publication: 2013
The title of a journal, publication series: TILEC discussion paper
Volume: 11-004
Place of publication: Tilburg
Publishing house: Tilburg Law and Economics Center
Publication language: English
Institution: School of Law and Economics > VWL, Mikroökonomik (Juniorprofessur) (Tarantino 2014-)
Subject: 330 Economics
Classification: JEL: K21 , L13 , L24 , L42,
Keywords (English): Vertical Relations , Vertical Integration , Foreclosure , Complementary Inputs , Secret Offers , Pairwise
Abstract: We analyze the welfare consequences and the profitability of vertical integration when downstream firms deal with complementary input suppliers holding market power. We find that although single integration is anticompetitive, pairwise integration is often procompetitive and involves below cost pricing at the wholesale level. Moreover, we show that vertical integration is not necessarily profitable, since a complementary input provider extracts part of the greater profits earned by the integrated chain. Contrary to previous literature, this effect is particularly strong if the integrated firm is highly efficient. Finally, we analyze the role of information sharing within an integrated organization.

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.




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Reisinger, Markus ; Tarantino, Emanuele (2013) Vertical integration with complementary inputs. TILEC discussion paper Tilburg 11-004 [Working paper]


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