Vertical Market Participation

Abstract

Firms that operate at both levels of vertically related Cournot oligopolies will purchase some input supplies from independent rivals, even though they can produce the good at a lower cost, driving up input price for nonintegrated firms at the final good level. Foreclosure, which avoids this strategic behavior, yields better market performance than Cournot beliefs.

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Schrader, A., Martin, S. Vertical Market Participation. Review of Industrial Organization 13, 321–331 (1998). https://doi.org/10.1023/A:1007741508413

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  • Bertrand reactions
  • Cournot reactions
  • integrated firms
  • vertical market