Two comments on the industrial organisation of vertically related markets
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Date
1998-03
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Abstract
This paper studies the determination of final consumer price when two successive monopolist bargain over the intermediate goods price. Unlike the conventional double marginalization result which rests on the (implicit) assumption that the upstream firm has all the bargaining power, it is shown that, as the bargaining power shifts from downstream firm to upstream firm the equilibrium quantity (price) decreases (increases) continuously from the vertically integrated outcome to the conventional double marginalization outcome. This paper next studies the determination of retail and wholesale prices in successive court oligopolies and geueralizes the results of Bresnahan and Reiss (1985) on the ratio of tetial to wholesale margins in successive monopolies.
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successive monopoly, successive oligopoly