The recent literature on vertical foreclosure suggests that vertical integration can have the anticompetitive effect of enabling an upstream firm to commit to restricting output to downstream firms at the monopoly level. We allow the upstream firm to make an ex-ante capital precommitment. We...

This paper analyzes the impact of competition among downstream firms on an upstream firm's payoff and on its incentive to vertically integrate when firms in both segments negotiate optimal contracts. We argue that as competition becomes more intense, the upstream firm obtains a larger share of a...

We analyze the competitive effects of backward vertical integration by a partially vertically integrated firm that competes with non-integrated firms both upstream and downstream. We show that vertical integration is procompetitive under fairly general conditions. It can be anticompetitive only...

We investigate the effect of a vertical merger on downstream firms' ability to collude in a repeated game framework. We show that a vertical merger has two main effects. On the one hand, it increases the total collusive profits, increasing the stakes of collusion. On the other hand, it creates...