Equilibrium Vertical Foreclosure
Equilibrium Vertical Foreclosure
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In our eReader you can find the full English version of the book. Read Equilibrium Vertical Foreclosure Online - link to read the book on full screen. Our eReader also allows you to upload and read Pdf, Txt, ePub and fb2 books. In the Mini eReder on the page below you can quickly view all pages of the book - Read Book Equilibrium Vertical Foreclosure
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Yet, as we have seen, other two-part tariffs in which a higher unit price and lower fixed fee are charged may be mutually beneficial to the contracting party. This occurs in the case of differentiated products price competition because, given the best-response function of its rival, the equilibrium revenue of the firm is (locally) higher if its input costs are higher.
However, a two-part tariff between unintegrated firms may not be the only way of effecting an increase in marginal input prices.... Indeed, if an integrated firm can commit to an internal transfer price above marginal cost, this can have the same effect.
The question therefore reduces to one of identifying the factors that determine which of these potential vertical contracts is feasible in a given setting. We are able to identify several of these. First, in order to effect foreclosure, the foreclosing downstream firm may need not only to secure control over the price which it is charged by its supplier, but also secure control over the price which its supplier charges to its downstream rival, while that is eminently plausible in the case of full vertical integration, it may be less plausible, for antitrust reasons, in the case of a vertical contract.
What to read after Equilibrium Vertical Foreclosure?
You can find similar books in the "Read Also" column, or choose other free books by Janusz a Ordover to read onlineMoreLess
To quickly assess the difficulty of the text, read a short excerpt:
Yet, as we have seen, other two-part tariffs in which a higher unit price and lower fixed fee are charged may be mutually beneficial to the contracting party. This occurs in the case of differentiated products price competition because, given the best-response function of its rival, the equilibrium revenue of the firm is (locally) higher if its input costs are higher.
However, a two-part tariff between unintegrated firms may not be the only way of effecting an increase in marginal input prices.... Indeed, if an integrated firm can commit to an internal transfer price above marginal cost, this can have the same effect.
The question therefore reduces to one of identifying the factors that determine which of these potential vertical contracts is feasible in a given setting. We are able to identify several of these. First, in order to effect foreclosure, the foreclosing downstream firm may need not only to secure control over the price which it is charged by its supplier, but also secure control over the price which its supplier charges to its downstream rival, while that is eminently plausible in the case of full vertical integration, it may be less plausible, for antitrust reasons, in the case of a vertical contract.
What to read after Equilibrium Vertical Foreclosure?
You can find similar books in the "Read Also" column, or choose other free books by Janusz a Ordover to read onlineMoreLess
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