Document de travail

Vertical Integration as a Source of Hold-up

Marie-Laure Allain, Patrick Rey et Claire Chambolle

Résumé

While vertical integration is traditionally seen as a solution to the hold-up problem, this paper highlights instead that it can generate hold-up problems — for rivals. We first consider a successive duopoly where competition among suppliers eliminates any risk of hold-up; downstreamfirms thus obtain the full return from their investments. We then show that vertical integration creates hold-up concerns for the downstream rival, by affecting the integrated supplier’s incentives from both ex ante and ex post standpoints. We also provide illustrations in terms of standard industrial organization models and of antitrust cases, and discuss the robustness of the insights.

Mots-clés

Vertical Integration; Hold-up; Incomplete contracts; Vertical foreclosure;

Codes JEL

  • L13: Oligopoly and Other Imperfect Markets
  • L41: Monopolization • Horizontal Anticompetitive Practices
  • L42: Vertical Restraints • Resale Price Maintenance • Quantity Discounts

Remplacé par

Marie-Laure Allain, Patrick Rey et Claire Chambolle, « Vertical Integration as a Source of Hold-up », The Review of Economic Studies, vol. 83, n° 1, janvier 2016, p. 1–25.

Référence

Marie-Laure Allain, Patrick Rey et Claire Chambolle, « Vertical Integration as a Source of Hold-up », TSE Working Paper, n° 14-525, septembre 2014.

Voir aussi

Publié dans

TSE Working Paper, n° 14-525, septembre 2014