Home  About us  Contact
 

Integrated Firm (integrate + firm)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

Regulation of an Open Access Essential Facility

ECONOMICA, Issue 300 2008
AXEL GAUTIER
A vertically integrated firm owns an essential input and operates on the downstream market. There is a potential entrant in the downstream market. Both firms use the same essential input. The regulator's objectives are (i) to ensure financing of the essential input and (ii) to generate competition in the downstream market. The regulatory mechanism grants non-discriminatory access of the essential facility to the entrant provided it pays a two-part tariff to the incumbent. The optimal mechanism generates inefficient entry. The inefficient entry captures the trade-off between market efficiency and infrastructure financing resulting from incomplete information and non-discriminatory access. [source]

Randal Heeb Innovation and Vertical Integration in Complementary Markets

JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 3 2003
Randal Heeb
This paper studies vertical integration by an essential-good monopolist into complementary markets. Unlike previous studies of complementary products, consumers are allowed to purchase some components of a complementary basket, but not others. Two different pricing strategies by the integrated firm may emerge. In mass-market equilibria, the price of the complement under integration is zero and it is given away with the essential good. Niche-market equilibria have more conventional pricing. This dichotomy is consistent with consumer software pricing. Integration enhances consumer and total surplus, unless it leads to exit by the higher-quality rival, in which case welfare is reduced. Exit is most likely when it is least damaging to consumer welfare. Integration reduces innovation by the rival firm. The effect on innovation by the integrated firm is ambiguous, but numerical computation of an extended model indicates that integration increases the innovation of the integrated firm and enhances welfare. [source]

Ownership, incentives, and the hold-up problem

THE RAND JOURNAL OF ECONOMICS, Issue 2 2006
Tim Baldenius
Vertical integration is often proposed as a way to resolve hold-up problems. This ignores the empirical fact that division managers tend to maximize divisional (not firmwide) profit when investing. I develop a model with asymmetric information at the bargaining stage and investment returns taking the form of cash and "empire benefits." Owners of a vertically integrated firm will then provide division managers with low-powered incentives to induce them to bargain more cooperatively, resulting in higher investments and overall profit as compared with nonintegration. Vertical integration therefore mitigates hold-up problems even without profit sharing. [source]

Vertical Foreclosure, Technological Choice, and Entry on the Intermediate Market

JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 3 2000
Eric Avenel
This paper analyzes the profitability of vertical integration for an upstream monopoly facing a potential competitor. We show that it depends on the technology used by the firm when it integrates. We distinguish two types of technologies: standard technologies, used by nonintegrated firms, and nonstandard technologies, reserved for integrated firms and implying the complete foreclosure of nonintegrated firms. Vertical integration with the adoption of a nonstandard technology dominates vertical integration with the adoption of a standard technology and is profitable, as long as the degree of competition in the downstream industry is sufficiently low. [source]

Vertical Foreclosure, Technological Choice, and Entry on the Intermediate Market

JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 2 2000
Eric Avenel
This paper analyzes the profitability of vertical integration for an upstream monopoly facing a potential competitor. We show that it depends on the technology used by the firm when it integrates. We distinguish two types of technologies: standard technologies, used by nonintegrated firms, and nonstandard technologies, reserved for integrated firms and implying the complete foreclosure of nonintegrated firms. Vertical integration with the adoption of a nonstandard technology dominates vertical integration with the adoption of a standard technology and is profitable, as long as the degree of competition in the downstream industry is sufficiently low. [source]

STRATEGIC VERTICAL INTEGRATION WITHOUT FORECLOSURE,

THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 2 2008
E. AVENEL
Merger waves; vertical integration; vertical foreclosure We determine the endogenous degree of vertical integration in a model of successive oligopoly that captures both efficiency gains and strategic effects. Foreclosure effects are purposely left aside. The profitability of integration originates in the greater ability of integrated firms to adopt a specific type of technologies. We show that vertical merger waves can stop by themselves before integration is complete because of strategic substitutability in vertical integration. This is in contrast to the strategic complementarity result in McLaren [2000] that leads to either complete integration or complete separation. [source]