We analyze the impact of an entry threat at the downstream level on the ability of a pair of vertically integrated incumbents to collude. Entrants depend on the vertically integrated firms on the intermediate market for the purchasing of good. While the entry threat leaves collusion profits unchanged, we show that deviation profits are also unchanged and that profits are lower in the punishment periods. Consequently, an entry threat facilitates collusion, thus benefiting to incumbents.
collusion; intégration verticale; entrée; exclusion;
- D43: Oligopoly and Other Forms of Market Imperfection
- L13: Oligopoly and Other Imperfect Markets
- L23: Organization of Production
- L40: General
Eric Avenel, and Stéphane Caprice, “Collusion et possibilité d’entrée en aval dans une industrie verticalement intégrée”, TSE Working Paper, n. 15-613, November 2015.
TSE Working Paper, n. 15-613, November 2015