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Permanent URL to this publication: http://dx.doi.org/10.5167/uzh-52195

Buehler, Stefan; Schmutzler, Armin (2005). Intimidating Competitors Endogenous Vertical Integration and Downstream Investment in Successive Oligopoly. Working paper series / Socioeconomic Institute No. 409, University of Zurich.

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Abstract

We examine the interplay of endogenous vertical integration and costreducing downstream investment in successive oligopoly. We start from a linear Cournot model to motivate our more general reducedform framework. For this general framework, we establish the following main results: First, vertical integration increases own investment and decreases competitor investment (intimidation effect). Second, asymmetric equilibria typically involve integrated firms that invest more into effciency than their separated counterparts. Our findings suggest that asymmetric vertical integration is a potential explanation for the initial difference between leader and laggard in investment games.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Socioeconomic Institute (former)
DDC:330 Economics
JEL Classification:L13, L20, L22
Language:English
Date:July 2005
Deposited On:29 Nov 2011 22:32
Last Modified:09 Jul 2012 05:03
Series Name:Working paper series / Socioeconomic Institute
Official URL:http://www.econ.uzh.ch/wp.html

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