Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/288645 
Year of Publication: 
2020
Citation: 
[Journal:] Review of Industrial Organization [ISSN:] 1573-7160 [Volume:] 58 [Issue:] 3 [Publisher:] Springer US [Place:] New York, NY [Year:] 2020 [Pages:] 399-429
Publisher: 
Springer US, New York, NY
Abstract: 
This paper examines situations where two vertically integrated firms consider supplying an input to an independent downstream competitor via privately observed contracts. We identify equilibria where competition in the upstream market emerges—the downstream competitor gets supplied—as well as when the downstream firm does not receive the input and is excluded from the market. The likelihood of the outcome in which the downstream firm does not get supplied depends not only on demand parameters, but also on contractual flexibility and observability. We show that when contracts are unobservable, downstream entry will occur less often. Furthermore, our results suggest that permitting contracts that enable the contracting parties to coordinate their behavior in the downstream market may improve welfare by increasing the likelihood that the downstream firm is supplied.
Subjects: 
Collective refusal to supply
Foreclosure
Unobservable contracts
Upstream competition
JEL: 
L13
L40
L42
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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