Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103371
Authors: 
Caprice, Stéphane
von Schlippenbach, Vanessa
Wey, Christian
Year of Publication: 
2014
Series/Report no.: 
DIW Discussion Papers 1408
Abstract: 
Considering a vertical structure with perfectly competitive upstream firms that deliver a homogenous good to a differentiated retail duopoly, we show that upstream fixed costs may help to monopolize the downstream market. We find that downstream prices increase in upstream firms' fixed costs when both intra- and interbrand competition exist. Our findings contradict the common wisdom that fixed costs do not affect market outcomes.
Subjects: 
Fixed Costs
Vertical Contracting
Monopolization
JEL: 
L13
L14
L42
Document Type: 
Working Paper

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