Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/147308
Authors: 
Möllers, Claudia
Year of Publication: 
2016
Series/Report no.: 
DICE Discussion Paper 232
Abstract: 
Building on the seminal paper of Ordover, Saloner and Salop (1990), I study the role of reputation building on foreclosure in laboratory experiments. In one-shot interactions, upstream firms can choose to build a reputation by revealing their price history to the current upstream competitor. In particular, integrated firms can establish a reputation to foreclose the input market.an outcome that would otherwise not be tenable due to a commitment problem. I get three main results: First, withdrawal from the input market is three times more common with reputation building of the integrated firm. Second, the anticompetitive effects are much stronger when the integrated firm builds a reputation. Third, integrated firms choose to build a reputation significantly more often than non-integrated firms. Markets with reputation building of the integrated firm are ten times more often monopolized than without.
Subjects: 
vertical restraints
commitment
reputation
experiments
JEL: 
L42
D43
C90
D83
C72
ISBN: 
978-3-86304-231-8
Document Type: 
Working Paper

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