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This classroom experiment introduces students to the concept of double marginalization, i.e., the exercise of market power at successive vertical layers in a supply chain. By taking on roles of firms, students determine how the mark-ups are set at each successive production stage. They learn...
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theory, the upstream firm has more difficulty commiting to supply the monopoly quantity in treatments with non … existing theory, we extend received theory by allowing downstream subjects to have heterogeneous out-of-equilibrium beliefs (a …
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theory, vertical integration improves the upstream firm's ability to commit to restricting output to the monopoly level, as … theory, we extend the theory to allow downstream firms to have heterogeneous (rather than purely passive or symmetric) out …
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