We demonstrate the sensitivity of the location of downstream firms, engaged in sequential spatial competition, to the vertical structure of an industry where no downstream firm can produce all varieties demanded.

We show how, in an industry where no downstream firm can produce all varieties demanded, a vertical merger with a monopoly upstream will induce each downstream firm (inside and out of the merger) to deviate from the socially optimal location.

We visit the role of privatization in the location decision of firms in an industry where no firm can produce all varieties demanded. We demonstrate that the Nash equilibrium locations are socially optimal, in the presence of a publicly owned firm, notwithstanding the degree of privatization.