Economic theory underlines that vertical mergers are very likely to lead to efficiencies and benefit consumers. On the other hand, more recent research found that vertical integration can also be used as an anti-competitive tool by firms, and harm consumers, notably through foreclosure. These...

Where legal systems and market forces enforce contracts inadequately, vertical integration can circumvent these transaction difficulties. But, such environments often also feature highly interventionist government, and even corruption. Vertical integration might then enhance returns to political...

The paper analyzes the evolution of vertical integration during the product life cycle. It is shown that increases in demand increase the incentives for vertical integration, while increases in competition reduce them. Next, the paper analyzes the interaction between demand growth and changes in...

We examine the implications of different contractual forms for welfare as well as for firms’ profits in a framework in which a vertically integrated firm sells its good to an independent downstream firm. Under downstream Bertrand competition, the standard result of the desirability of two-part...

Double marginalization causes inefficiencies in vertical markets. This paper argues that such inefficiencies may be beneficial to final consumers in markets producing vertically differentiated goods. The rationale behind this result is that enhancing efficiency in high-quality supply chains...

We demonstrate how the incentives of firms that partially own their suppliers or customers to foreclose rivals depend on how the partial owner can extract profits from the target. Compared to a fully vertically integrated firm, a partial owner may obtain only a share of the target's profit but...