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Title: Who Integrates?

Author(s): Stefan Bühler and Armin Schmutzler

Publication Date: September 2003

Keyword(s): efficiency, foreclosure, vertical integration and vertically-related oligopolies

Programme Area(s): Industrial Organization

Abstract: We examine vertical backward integration in oligopoly. Analysing a standard linear Cournot model, we find that for wide parameter ranges (i) some firms integrate, while others remain separated, and (ii) efficient firms are more likely to integrate vertically. Adopting a reduced-form approach, we identify a wholesale price effect and demand/mark-up complementarities as the driving forces for our results. We show that our results generalize beyond the Cournot example under fairly natural assumptions.

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Bibliographic Reference

Bühler, S and Schmutzler, A. 2003. 'Who Integrates?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4066