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Asymmetric Vertical Integration

Buehler, Stefan ; Schmutzler, Armin

In: Advances in Theoretical Economics, 2005, vol. 5, no. 1, p. -

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    Titre
    • Asymmetric Vertical Integration
    Auteur
    • Buehler, Stefan. University of Zurich and University of St. Gallen, stefan.buehler@unisg.ch
    • Schmutzler, Armin. University of Zurich, CEPR and ENCORE, arminsch@soi.uzh.ch
    Type de document
    • Postprint
    Identifiant OAI-PMH
    • oai:doc.rero.ch:293934
    Summary
    We examine vertical backward integration in a reduced-form model of successive oligopolies. Our key findings are: (i) There may be asymmetric equilibria where some firms integrate and others remain separated, even if firms are symmetric initially; (ii) Efficient firms are more likely to integrate vertically. As a result, integrated firms also tend to have a large market share. The driving force behind these findings are demand/mark-up complementarities in the product market. We also identify countervailing forces resulting from strong vertical foreclosure, upstream sales and endogenous acquisition costs