We provide a simple model to investigate decisions on vertical integration/separation. The key feature of this model is that more than one input is required for the final products of the local downstream monopolists. Depending on their cost structure, downstream firms' decisions on vertical...

Both mergers and innovation are central elements of a firm s competitive strategy. However, model-theoretical analysis of the merger-innovation link is sparse. The aim of this paper is to analyze the impact of mergers on innovative activities and product market competition in the context of...

Contractual inefficiencies within supply chains increase an input price above its marginal cost, therefore they are considered detrimental to consumer surplus. We argue that such inefficiencies may be beneficial to consumers in quality-differentiated markets where the "finiteness property"...

This paper proposes and tests a model of supermarket competition based upon John Sutton's (1991) endogenous fixed cost (EFC) framework. The relevance of the EFC framework to supermarket competition stems from the industry's surprisingly uniform competitive structure: irrespective of the size of...

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...

Antitrust authorities regard the possibility of post-merger entry and merger-generated efficiencies as two factors that may counteract the negative effects of horizontal mergers. This paper shows that in differentiated oligopolies with linear demand, all entry-inducing mergers harm consumer...

Inspired by the empirical work of Holmes (2011), which suggests the economic importance of distribution costs in the firm's optimal location decision, this paper introduces endogenous distribution costs in the model of Hotelling (1929). The proposed model shows an interesting trade-off between...

In this article, I study the effect of entry and ownership structure on product variety within a city. Using longitudinal data on theaters in Korea, I find that the positive effect of entry on city-wide movie variety is limited only to the first few entrants. This finding, together with the...

In this paper, we examine the impact of horizontal and vertical market structure on product variety. We consider a market for horizontally differentiated products in which the cost of launching a new product is fixed and spread between the manufacturing and the retail industries. While this...

It is well known that two-sided network effects may turn duopolistic markets into monopolies, but it is still in question under which conditions this occurs in practice. To derive the conditions in which a platform market is tippy, I develop a differential game framework incorporating product...