Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/158026
Authors: 
Hunold, Matthias
Year of Publication: 
2017
Series/Report no.: 
DICE Discussion Paper 250
Abstract: 
Entry deterrence can occur when downstream incumbents hold non-controlling ownership shares of a supplier which is commited to charge uniform prices to all downstream firms. The ownership shares imply a rebate on the input price for the incumbents through the profit participation. Such backward ownership induces the supplier to accommodate entry by charging a low uniform price to all downstream firms in case of entry. However, just the entry-accommodating behavior reduces entry profits and thereby can lead to market foreclosure. Based on this theory, the article reviews a merger case in the financial services industry and draws conclusions for regulation and competition policy.
Subjects: 
entry deterrence
foreclosure
minority shareholdings
non-controlling partial ownership
uniform pricing
vertical integration
JEL: 
G34
L22
L40
ISBN: 
978-3-86304-249-3
Document Type: 
Working Paper

Files in This Item:
File
Size
560.56 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.