Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Wednesday, April 7, 2010

Downstream Mode of Competition With Upstream Market Power

Posted by D. Daniel Sokol

Constantine Manasakis (Department of Economics, University of Crete, Greece) and Minas Vlassis (Department of Economics, University of Crete, Greece) describe a Downstream Mode of Competition With Upstream Market Power.

ABSTRACT: In contrast with previous studies we assume no ex-ante commitment over the ─price or quantity─ type of contract which downstream firms will independently offer consumers in a two-tier oligopoly. Under competing vertical chains, we propose that the downstream mode of competition which in equilibrium emerges is the outcome of independent implicit agreements, between each downstream firm and its exclusive input supplier, in each vertical chain. Our findings suggest that input suppliers may thus act as commitment devices sufficient to endogenously sustain the quantity (Cournot) mode of competition.

http://lawprofessors.typepad.com/antitrustprof_blog/2010/04/downstream-mode-of-competition-with-upstream-market-power-.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0133ec54b4f6970b

Listed below are links to weblogs that reference Downstream Mode of Competition With Upstream Market Power :

Comments

Post a comment