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Title:Investment specificity, vertical integration and market foreclosure PDF Logo
Authors:Bickenbach, Frank
Williams, Iestyn
Issue Date:1996
Series/Report no.:Kiel Working Papers 734
Abstract:In this paper we consider the impact of vertical integration on a retailer's choices of product variety and specific, brand-supporting investment. In an incomplete contract environment, vertical merger encourages investment in integrated supply, and foreclosure of non-integrated manufacturers. Anti-competitive as opposed to efficiency interpretations depend delicately on a trade-off between the benefits of supplier-specific rather than generally applicable retailer investment, and the value of multi-product rather than single product retailing. Where retailers compete, it is shown that vertical integration implements competition reducing, product differentiating investment strategies.
Subjects:incomplete contracts
vertical integration
monopolization
JEL:L22
L12
L4
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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