Bilateral monopolies, exible production technologies and upstream merger
نویسنده
چکیده
In this paper I develop a theoretical model and analyze the relationship between two bilateral monopolies, investments decisions of downstream rms regarding technologies speci c to suppliers, and suppliers incentives to merge. The paper discusses the concept of the choice of dedicated versus exible production technology in the context of bilateral monopolies. I aim to answer two questions. First, what are suppliersmerger incentives given the technology choice of downstream rms? Second, what are the welfare implications of the decisions regarding investments in the production technologies and merger? Although exible production technologies have positive e¤ect on product market competition, downstream rms might overinvest in such technologies. This is particularly true when products are strong substitutes. Then investments in technologies increasing product variety are not desirable from the social welfare standpoint. Keywords: exible production technology; merger; vertical relations. JEL-Classi cation: L12, L14, L25
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تاریخ انتشار 2008