Excess Entry, Vertical Integration, and Welfare
Year: 1999
Type: article
Abstract: This article provides a systematic analysis of the welfare effects of vertical integration by a monopolist input supplier into a monopolistically competitive downstream industry. We give sufficient conditions on consumer preferences that lead to Pareto-improving vertical integration and demonstrate a close relationship between assumptions on preference for variety, excess entry in monopolistically competitive markets, and the welfare effects of vertical integration: Excess entry in downstream markets tends to give rise to Pareto-improving vertical integration. We extend the analysis to vertical oligopoly and access price regulation.
Source: The RAND Journal of Economics
DOI: 10.2307/2556066
Authors: Kai-Uwe Kuhn, Xavier Vives
Institution: University of Michigan
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2087554089