Excess Entry, Vertical Integration, and Welfare
This article provides a systematic analysis of the welfare effects of vertical integration by a monopolist input supplier into a monopolistically competitive downstream industry. We give sufficient conditions on consumer preferences that lead to Pareto-improving vertical integration and demonstrate a close relationship between assumptions on preference for variety, excess entry in monopolistically competitive markets, and the welfare effects of vertical integration: Excess entry in downstream markets tends to give rise to Pareto-improving vertical integration. We extend the analysis to vertical oligopoly and access price regulation.
Year of publication: |
1999
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Authors: | Kuhn, Kai-Uwe ; Vives, Xavier |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 30.1999, 4, p. 575-603
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Publisher: |
The RAND Corporation |
Saved in:
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