Download or read book Vertical Integration and Sabotage in Regulated Industries written by Álvaro E. Bustos and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: An essential facility produces 'access', an essential input used by a competitive downstream industry. The access charge is regulated. The essential facility can vertically integrate into the downstream segment and sabotage rivals increasing their costs.We systematically study the vertical integration decision and the optimal level of sabotage. Contrary to most of the literature, we allow for free entry into the downstream segment, so that prices equal long-run average costs.We find the following: First, sabotage does not pay when diseconomies of scope are large, or the subsidiary's market share is small. Second, when sabotage pays, and the subsidiary coexists with rivals in equilibrium, optimal sabotage increases with the subsidiary's market share and scope economies. On the other hand, when the essential facility optimally sabotages to exclude rivals, the intensity of sabotage falls with economies of scope. Third, unless the subsidiary is implausibly more efficient than independent firms, vertical integration never benefits consumers.
Download or read book Vertical Integration and Sabotage written by George Chikhladze and published by . This book was released on 2009 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many network industries have an upstream monopolist that sells an essential input to downstream firms. When price of access is regulated the integrated monopolist may have incentives to degrade the quality of access if it is integrated with one of the downstream firms. The goal of this dissertation is: 1) to study the US natural gas, electricity and telecommunications industries to document instances of sabotage; 2) to derive study the welfare optimal access charge and vertical control policies under two different downstream market structures, differentiated goods Bertrand duopoly and the dominant firm competitive fringe model. We find that concerns for sabotage are real as it does occur in these regulated industries. We also find that the regulator faces a trade-off between reducing the double markup problem by pricing access low, versus pricing access high in order to deter non-price discrimination. Also, the optimal vertical control policy is chosen to balance a trade-off between achieving an efficient downstream production mix and sabotage deterrence.
Download or read book Vertical Integration as Strategic Behavior in a Spatial Setting written by David T. Levy and published by . This book was released on 1988 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Vertical Integration and Sabotage with a Regulated Bottleneck Monopoly written by Álvaro E. Bustos and published by . This book was released on 2017 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we systematically study the vertical integration and sabotage decisions of a regulated bottleneck monopoly that sells access to independent downstream firms. Our results reconciliate a set of seemingly contradictory findings of the literature. We show that unless the monopoly's subsidiary is implausible more efficient than the independent firms, vertical integration never benefits consumers. Moreover, sabotage may prompt inefficient vertical integration. In addition, we show that the intensity of sabotage either depends on a relation between the market share of the subsidiary and the elasticity of the derived demand for access or a standard Lerner condition augmented by the direct cost of sabotage. More specifically, if the subsidiary and independent firms coexist in equilibrium, then the intensity of sabotage increases with the subsidiary's size and the intensity of economies of scope but if the monopoly optimally excludes rivals then intensity of sabotage decreases on these same parameters.
Download or read book Vertical Integration and Sabotage in Regulated Industries written by Alvaro Bustos and published by . This book was released on 2003 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Merge and Compete written by Filippo Vergara Caffarelli and published by . This book was released on 2006 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Vertical Integration on Firms Subejct to Regulatory Constraints written by Nagabhushanam Pulikonda and published by . This book was released on 1979 with total page 338 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Vertical Integration Raising Rivals Costs and Upstream Collusion written by Hans-Theo Normann and published by . This book was released on 2010 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the impact vertical integration has on upstream collusion when the price of the input is linear. As a first step, the paper derives the collusive equilibrium that requires the lowest discount factor in the infinitely repeated game when one firm is vertically integrated. It turns out this is the joint-profit maximum of the colluding firms. The discount factor needed to sustain this equilibrium is then shown to be unambiguously lower than the one needed for collusion in the separated industry. While the previous literature has found it difficult to reconcile raising-rivals-costs strategies following a vertical merger with equilibrium behavior in the static game, they are subgame perfect in the repeated game studied here.
Download or read book Vertical Integration Raising Rivals Cost and Upstream Collusion written by Hans-Theo Normann and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the impact vertical integration has on upstream collusion when the price of the input is linear. As a first step, the paper derives the collusive equilibrium that requires the lowest discount factor in the infinitely repeated game when one firm is vertically integrated. It turns out this is the joint-profit maximum of the colluding firms. The discount factor needed to sustain this equilibrium is then shown to be unambiguously lower than the one needed for collusion in the separated industry. While the previous literature has found it difficult to reconcile raising-rivals-costs strategies following a vertical merger with equilibrium behavior in the static game, they are subgame perfect in the repeated game studied here.
Download or read book The Impact of Vertical Integration on Firms Subject to Regulatory Constraints written by Nagabhushanam Pulikonda and published by . This book was released on 1979 with total page 338 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Strategies for Vertical Integration written by Kathryn Rudie Harrigan and published by Free Press. This book was released on 1983 with total page 372 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Uncreative Destruction written by Brent Skorup and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Are information sectors sufficiently different from other sectors of the economy such that more stringent antitrust standards should be applied to them preemptively? Columbia Law School professor Tim Wu responds in the affirmative in his book The Master Switch: The Rise and Fall of Information Empires. Wu proposes preventing vertical mergers in the information economy and the mandatory divestiture of vertically integrated companies. To implement this, Wu proposes a Separations Principle for the information economy, which would segregate information providers into three buckets, which we have labeled information creators, information distributors, and hardware makers. This article outlines Wu's separations proposal, explains why his fears regarding vertical relationships should be rejected by regulatory and antitrust policymakers, and illustrates the legal and practical problems his Separations Principle poses. Wu justifies his Separations Principle by citing monopolies and market power in the information economy. He also advocates using U.S. antitrust authorities to enforce his Principle. We argue that the antitrust harms he fears are not present, and we highlight scholarship on the accepted benefits of vertically integrated firms. We show that Wu's remedies are policy preferences wrapped in the language of competition law. In fact, the information economy is largely competitive and does not warrant interventionist regulatory enforcement. Since much of American economic vitality flows from the information economy and technology, policymakers should reject a radical antitrust remedy like Wu's preemptive Separations Principle.
Download or read book Vertical Integration in the Presence of Upstream Competition written by Catherine de Fontenay and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyse vertical integration when there is upstream competition and compare outcomes to the case where upstream assets are owned by a single agent (i.e., upstream monopoly). In so doing, we make two contributions to the modelling of strategic vertical integration. First, we base industry structure - namely, the ownership of assets - firmly within the property rights approach to firm boundaries. Second, we model the potential multilateral negotiations using a fully specified non-cooperative bargaining model designed to easily compare outcomes achieved under upstream competition and monopoly. Given this, we demonstrate that vertical integration can alter the joint payoffs of integrating parties in ex post bargaining; however, this bargaining effect is stronger for firms integrating under upstream competition than upstream monopoly. We also consider the potential for integration to internalise competitive externalities in manner that cannot be achieved under non-integration. We demonstrate that ex post monopolization is more likely to occur when there is an upstream monopoly than when there is upstream competition. Our general conclusion is that the simple intuition that the presence of upstream competition can mitigate and reduce the incentives for socially undesirable vertical integration is misplaced and, depending upon the strength of downstream competition (i.e., product differentiation), the opposite could easily be the case.
Download or read book Vertical Integration and Performance written by Jeffrey Scott Wilson and published by . This book was released on 1978 with total page 408 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The impact of vertical integration on firms written by Nagabhushanam Pulikonda and published by . This book was released on 1980 with total page 169 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Vertical Integration and Proprietary Information Transfers written by John Hughes and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Suppose that rival downstream producers of a final good contract with the same upstream supplier of an input and, in the process, reveal private information. A vertical merger between the upstream supplier and one of the downstream firms may dissipate the information advantage of the remaining downstream firms. The welfare consequences of such a merger and related information sharing depend on the value of information, the benefits of integration apart from information sharing, and the nature of upstream competition. In this paper, conditions are found under which owners of a vertically integrated firm are better off breaking up into independent firms. This result may explain AT&T's recent spinoff of Lucent Technologies. Further results suggest that a prohibition on information transfers, such as that often proposed by the Federal Trade Commission and Department of Justice as a precursor to approving vertical mergers, may actually reduce expected consumer surplus and expected social welfare. Copyright (c) 2001 Massachusetts Institute of Technology.
Download or read book The Strategic Management of Vertical Integration written by Douglas Blackmur and published by . This book was released on 1990 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
