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Contractual theories of vertical integration derive firm boundaries as an efficient response to market transaction costs. These theories predict a relationship between underlying features of transactions and observed integration decisions. There has been some progress in testing these...
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We analyze firms' decisions to adopt a vertical integrated or decentralized structure taking into account the characteristics of both the final good competition and the R&D process. We consider two vertical chains, where R&D is conducted by upstream sectors. R&D investment determines the...
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Predatory selling has been evaluated and assessed by antitrust regulators, the courts, and the economics profession. Recently the spotlight has turned to alleged predatory buying. The criteria for determining in output markets whether monopolists or oligopolists are engaged in predatory actions...
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Asset specificity is usually considered to be an argument for vertical integration. The main idea is that specificity induces opportunistic behavior, and that vertical integration reduces the cost of preventing opportunism. In this article I show that asset specificity can be an argument for...
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Considering a vertical structure with perfectly competitive upstream firms that deliver a homogenous good to a differentiated retail duopoly, we show that upstream fixed costs may help to monopolize the downstream market. We find that downstream prices increase in upstream firms' fixed costs...
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