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How Do Market Structures Affect Decisions On Vertical Integration Separation
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Book Synopsis How Do Market Structures Affect Decisions on Vertical Integration/separation by : Noriaki Matsushima
Download or read book How Do Market Structures Affect Decisions on Vertical Integration/separation written by Noriaki Matsushima and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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 separation can be both strategic complements and strategic substitutes. As a result, the equilibrium number of vertically integrated firms depends on the cost structure. When the local downstream monopolists merge, vertical separation tends to appear in equilibrium. When an upstream firm can price discriminate, the downstream firms vertically separate. When the downstream firms compete with each other, vertical integration tends to appear if the degree of product differentiation is lower. -- vertical integration ; vertical separation ; local monopolists ; inputs ; technology
Book Synopsis The Antitrust Paradox by : Robert Bork
Download or read book The Antitrust Paradox written by Robert Bork and published by . This book was released on 2021-02-22 with total page 536 pages. Available in PDF, EPUB and Kindle. Book excerpt: The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.
Book Synopsis Vertical Integration and Regulation by : Christoph Kleineberg
Download or read book Vertical Integration and Regulation written by Christoph Kleineberg and published by Springer. This book was released on 2019-01-17 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book investigates under which circumstances vertical unbundling can lead to a more efficient market result. The assessment is based on an interdisciplinary approach combining law and economics. Drawing on the assessment, circumstances are subsequently presented under which unbundling might become necessary. Additionally, less severe means of regulatory intervention are suggested in order to protect competition. Given its scope, the book is chiefly intended for scholars and practitioners in the field of economic policy and regulation law; in addition, it will give interested members of the public a unique opportunity to learn about the underlying rationales of regulation law and regulation economics.
Book Synopsis On Vertical Market Structure and Buyer Countervailing Power by : Xu-liang WU
Download or read book On Vertical Market Structure and Buyer Countervailing Power written by Xu-liang WU and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper redefines different types of vertical market structure, such as double monopoly, bilateral monopoly, and two-sided monopoly. The core issue can be stated as follows: When there is bilateral monopoly, what are the differences between two-sided monopoly and one-sided monopoly as far as welfare consequences of retailers' rising buyer power are concerned. The results show that in tow-sided monopoly situation, from consumer welfare perspective, the results of vertical integration are better than the results of vertical separation, whereas in one-sided monopoly situation, the results of vertical separation are better than the results of vertical integration, so the vertical market structure of one-sided monopoly or one-sided competition effectively overcomes double marginalization problem, to counter the forces at this time the buyer countervailing power hypothesis is somewhat reasonable. Taking Inter-period factor into account, this conclusion is even more credible.
Book Synopsis Strategic Aspects of Oligopolistic Vertical Integration by : C. Wu
Download or read book Strategic Aspects of Oligopolistic Vertical Integration written by C. Wu and published by Elsevier. This book was released on 2017-12-28 with total page 244 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this text some fundamental issues concerning the strategic impact of vertical structures of firms are discussed in a successive oligopoly model. Vertical integration strategy has been identified as one of the key strategies which determine the success or failure of enterprises. Many studies on vertical integration are based on business experiences and interviews with managers. However, the extensive application of game theory in business economics allows this study on vertical integration to be based on sound theoretic ground. Moreover, the significance of public enterprises in some Western European economies and the trends of economic transition in Eastern Europe justify the efforts to analyse vertical integration issues in the mixed market, which is created by the participation of a public firm into an industry otherwise characterised as a successive oligopoly.
Book Synopsis Market Structure and the Competitive Effects of Vertical Integration by : Simon Loertscher
Download or read book Market Structure and the Competitive Effects of Vertical Integration written by Simon Loertscher and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze the competitive effects of backward vertical integration when firms exert market power upstream and compete à la Cournot downstream. Contrasting with previous literature, a small degree of vertical integration is always procompetitive because efficiency gains dominate foreclosure effects, and vertical integration even to full foreclosure can be procompetitive. Surprisingly, vertical integration is more likely to be procompetitive if the industry is otherwise more concentrated. Extensions analyze incentives to integrate and differentiated Bertrand competition downstream. Our analysis suggests that antitrust authorities should be wary of vertical integration when the integrating firm faces many competitors and should be permissive otherwise.
Book Synopsis Is Vertical Integration Profitable? by : Buzzell
Download or read book Is Vertical Integration Profitable? written by Buzzell and published by . This book was released on 1983-01-01 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Impact of Market Structure on Vertical Integration by : Mathias Erlei
Download or read book The Impact of Market Structure on Vertical Integration written by Mathias Erlei and published by . This book was released on 1994 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Markets for Technology by : Ashish Arora
Download or read book Markets for Technology written by Ashish Arora and published by MIT Press. This book was released on 2004-01-30 with total page 351 pages. Available in PDF, EPUB and Kindle. Book excerpt: The past two decades have seen a gradual but noticeable change in the economic organization of innovative activity. Most firms used to integrate research and development with activities such as production, marketing, and distribution. Today firms are forming joint ventures, research and development alliances, licensing deals, and a variety of other outsourcing arrangements with universities, technology-based start-ups, and other established firms. In many industries, a division of innovative labor is emerging, with a substantial increase in the licensing of existing and prospective technologies. In short, technology and knowledge are becoming definable and tradable commodities. Although researchers have made significant advances in understanding the determinants and consequences of innovation, until recently they have paid little attention to how innovation functions as an economic process. This book examines the nature and workings of markets for intermediate technological inputs. It looks first at how industry structure, the nature of knowledge, and intellectual property rights facilitate the development of technology markets. It then examines the impacts of these markets on firm boundaries, the division of labor within the economy, industry structure, and economic growth. Finally, it examines the implications of this framework for public policy and corporate strategy. Combining theoretical perspectives from economics and management with empirical analysis, the book also draws on historical evidence and case studies to flesh out its research results.
Book Synopsis Vertical Integration and Market Structure by : Timothy F. Bresnahan
Download or read book Vertical Integration and Market Structure written by Timothy F. Bresnahan and published by . This book was released on 2012 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contractual theories of vertical integration derive firm boundaries as an efficient response to market transaction costs. These theories predict a relationship between underlying features of transactions and observed integration decisions. There has been some progress in testing these predictions, but less progress in quantifying their importance. One difficulty is that empirical applications often must consider firm structure together with industry structure. Research in industrial organization frequently has adopted this perspective, emphasizing how scale and scope economies, and strategic considerations, influence patterns of industry integration. But this research has paid less attention to contractual or organizational details, so that these two major lines of research on vertical integration have proceeded in parallel with only rare intersection. We discuss the value of combining different viewpoints from organizational economics and industrial organization.
Book Synopsis Essays on Vertical Restraints and Competition Policy by : Chia-Wen Chen
Download or read book Essays on Vertical Restraints and Competition Policy written by Chia-Wen Chen and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Vertical restraints between firms, such as exclusive dealing contracts that forbid a dealer from promoting other manufacturers' products, are controversial in competition policy because of their potential anticompetitive effects. This dissertation addresses three issues in competition policy and vertical relationships between firms: (1) what are the effects of exclusive dealing on competitiveness of brands? (2) does exclusive dealing foreclose new entrants out of a market? (3) what is the effect of retail competition on market price in a vertically integrated industry when upstream firms face capacity constraints? Chapter 1 examines the impact of allowing more brands access to exclusive distribution networks on brand and market level outcomes. In the U.S., Anheuser Busch is the dominant firm in the beer industry and has exclusive dealing arrangements with many of its distributors. I looked at a recent beer distribution deal between Anheuser Busch and InBev that moved InBev brands into Anheuser Busch distribution networks. I collected beer distributor data before and after the event and matched them with a panel scanner dataset from a major grocery chain in Northern California. Using a difference-in-differences approach, I compared the changes in InBev market shares in markets in which InBev switched to Anheuser Busch distributors, to the changes in market shares in markets in which InBev switched to Anheuser Busch exclusive distributors. The results suggest that exclusive dealing matters in the beer industry: I find InBev market shares to be higher once allowed access to Anheuser Busch exclusive distribution networks. In addition, I do not find overall market quantity to be larger when more brands have access to Anheuser Busch exclusive networks. Instead, the results show cannibalization effects on existing brands' market share when a distributor acquires more brands. These results are more consistent with an incentive-based explanation for firms preferring exclusive contracts. Chapter 2 examines the effect of exclusive dealing on rival firms' entry decisions. I estimated an entry model of specialty beer producers in Northern California and tested whether exclusive dealing raises a firm's fixed costs. I modeled each firm's entry decision as a static entry game of incomplete information that allows for strategic interactions and employed a new panel scanner dataset from a major grocery chain in Northern California. Given that both firm and location profitability are heterogeneous, I controlled for post-entry demand conditions by estimating the demand for beer using a discrete choice model. Using the demand estimates and the predicted entry probabilities, I recovered a firm's fixed costs using a two-step estimator. I find some spillover effects on specialty beer producers' entry decisions. After taking strategic interactions into account, the results indicate that a firm has higher fixed costs at locations with exclusive distributors. The estimates also show that a firm is less likely to enter a location that is farther from its brewery, has lower expected demand or is smaller in store size. Finally, I implemented counter-factual experiments to study the effect of banning exclusive dealing. The results show that the welfare improvement associated with banning exclusive contracts is very small. Chapter 3 (joint with Christopher R. Knittel) considers a model of oligopolistic competition when upstream firms face capacity constraints. We studied the optimality conditions of upstream firms under vertical separation and vertical integration when firms compete on quantity. We illustrated the properties of the equilibrium wholesale and retail prices when the downstream market becomes less competitive with a numerical example. Using data on gasoline demand and refineries' capacity levels in California, we generated equilibrium wholesale and retail prices when the number of downstream firms varies. We find that whether a higher degree of retail market concentration results in higher retail price depends on market structure and the effectiveness of the capacity constraints. When independent refineries' capacity constraints are binding, the effect of a decrease in the number of independent retailers on retail gasoline price is very small.
Book Synopsis Vertical Integration and Market Structure by : Timothy Bresnahan
Download or read book Vertical Integration and Market Structure written by Timothy Bresnahan and published by . This book was released on 2014 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contractual theories of vertical integration derive firm boundaries as an efficient response to market transaction costs. These theories predict a relationship between underlying features of transactions and observed integration decisions. There has been some progress in testing these predictions, but less progress in quantifying their importance. One difficulty is that empirical applications often must consider firm structure together with industry structure. Research in industrial organization frequently has adopted this perspective, emphasizing how scale and scope economies, and strategic considerations, influence patterns of industry integration. But this research has paid less attention to contractual or organizational details, so that these two major lines of research on vertical integration have proceeded in parallel with only rare intersection. We discuss the value of combining different viewpoints from organizational economics and industrial organization.
Book Synopsis The Competitive Effects of Vertical Integration in Platform Markets by : Jérôme Pouyet
Download or read book The Competitive Effects of Vertical Integration in Platform Markets written by Jérôme Pouyet and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze vertical integration between platforms providing operating systems to manufacturers of devices when there are indirect network effects between buyers of devices and developers of applications. Vertical integration creates market power over developers, and over non-integrated manufacturers but only under certain circumstances. That market power enables to coordinate pricing decisions across both sides of the market, which leads to a better internalization of network effects. Vertical integration does not systematically lead to foreclosure and can benefit all parties, even in the absence of efficiency gains. Its competitive impact depends on the strength and the structure of indirect network effects.
Book Synopsis Vertical Mergers and Competition with a Regulated Bottleneck Monopoly by : Alexander Galetovic P.
Download or read book Vertical Mergers and Competition with a Regulated Bottleneck Monopoly written by Alexander Galetovic P. and published by . This book was released on 2004 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Investment Decisions by : Christopher Doyle
Download or read book Investment Decisions written by Christopher Doyle and published by . This book was released on 1994 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Handbook of Production Economics by : Subhash C. Ray
Download or read book Handbook of Production Economics written by Subhash C. Ray and published by Springer Nature. This book was released on 2022-06-02 with total page 1797 pages. Available in PDF, EPUB and Kindle. Book excerpt: This three-volume handbook includes state-of-the-art surveys in different areas of neoclassical production economics. Volumes 1 and 2 cover theoretical and methodological issues only. Volume 3 includes surveys of empirical applications in different areas like manufacturing, agriculture, banking, energy and environment, and so forth.
Book Synopsis Market definition and market power in the platform economy by : Jens-Uwe Franck
Download or read book Market definition and market power in the platform economy written by Jens-Uwe Franck and published by Centre on Regulation in Europe asbl (CERRE). This book was released on 2019-05-08 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt: With the rise of digital platforms and the natural tendency of markets involving platforms to become concentrated, competition authorities and courts are more frequently in a position to investigate and decide merger and abuse cases that involve platforms. This report provides guidance on how to define markets and on how to assess market power when dealing with two-sided platforms. DEFINITION Competition authorities and courts are well advised to uniformly use a multi-markets approach when defining markets in the context of two-sided platforms. The multi-markets approach is the more flexible instrument compared to the competing single-market approach that defines a single market for both sides of a platform, as the former naturally accounts for different substitution possibilities by the user groups on the two sides of the platform. While one might think of conditions under which a single-market approach could be feasible, the necessary conditions are so severe that it would only be applicable under rare circumstances. To fully appreciate business activities in platform markets from a competition law point of view, and to do justice to competition law’s purpose, which is to protect consumer welfare, the legal concept of a “market” should not be interpreted as requiring a price to be paid by one party to the other. It is not sufficient to consider the activities on the “unpaid side” of the platform only indirectly by way of including them in the competition law analysis of the “paid side” of the platform. Such an approach would exclude certain activities and ensuing positive or negative effects on consumer welfare altogether from the radar of competition law. Instead, competition practice should recognize straightforwardly that there can be “markets” for products offered free of charge, i.e. without monetary consideration by those who receive the product. ASSESSMENT The application of competition law often requires an assessment of market power. Using market shares as indicators of market power, in addition to all the difficulties in standard markets, raises further issues for two-sided platforms. When calculating revenue shares, the only reasonable option is to use the sum of revenues on all sides of the platform. Then, such shares should not be interpreted as market shares as they are aggregated over two interdependent markets. Large revenue shares appear to be a meaningful indicator of market power if all undertakings under consideration serve the same sides. However, they are often not meaningful if undertakings active in the relevant markets follow different business models. Given potentially strong cross-group external effects, market shares are less apt in the context of two-sided platforms to indicate market power (or the lack of it). Barriers to entry are at the core of persistent market power and, thus, the entrenchment of incumbent platforms. They deserve careful examination by competition authorities. Barriers to entry may arise due to users’ coordination failure in the presence of network effect. On two-sided platforms, users on both sides of the market have to coordinate their expectations. Barriers to entry are more likely to be present if an industry does not attract new users and if it does not undergo major technological change. Switching costs and network effects may go hand in hand: consumer switching costs sometimes depend on the number of platform users and, in this case, barriers to entry from consumer switching costs increase with platform size. Since market power is related to barriers to entry, the absence of entry attempts may be seen as an indication of market power. However, entry threats may arise from firms offering quite different services, as long as they provide a new home for users’ attention and needs.
