Equilibrium Vertical Integration with Complementary Input Markets
-
Noriaki Matsushima
und Tomomichi Mizuno
Abstract
We provide a model to investigate vertical integration decisions. This model assumes that local downstream manufacturers require two inputs to make their final products. One input is produced by a supplier shared by both manufacturers; another is produced by an exclusive supplier for each manufacturer. We show that vertical integration of each downstream firm with its exclusive supplier enhances the input demand for the common supplier, leading to an increase in the common supplier's input price due to the elimination of the double marginalization. Moreover, downstream firms that require a smaller quantity of inputs from the common supplier, for instance, those with efficient production technology or smaller downstream demand, are more likely to vertically integrate because vertical integration yields a smaller increase in input price. Thus, the cause of firm-size heterogeneity is important to consider when investigating the relationship between firm size and the tendency to vertically integrate.
©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
Artikel in diesem Heft
- Frontiers Article
- On the Competitive Effects of Bidding Syndicates
- Advances Article
- Tax Morale and Compliance Behavior: First Evidence on a Causal Link
- A New Look into the Determinants of the Ecological Discount Rate: Disentangling Social Preferences
- Impacts of Family Size on the Family as a Whole: Evidence from the Developing World
- The Inequality Effects of a Dual Income Tax System
- Signaling Creditworthiness in Peruvian Microfinance Markets: The Role of Information Sharing
- Contributions Article
- Cyclicality of Real Wages in Korea
- Graduating High School in a Recession: Work, Education, and Home Production
- A Group-based Wellness Intervention in the Laboratory
- Technology Inertia and the Benefits of Entry
- The Effect of Education on Equity Holdings
- Evaluating Patent Rights With Possible Patent Litigation
- The CPS Redesign's Effects on Measured Unemployment Duration in the Great Recession
- A Patent System with a Contingent Delegation Fee under Asymmetric Information
- The Economic Returns to Good Looks and Risky Sex in the Bangladesh Commercial Sex Market
- Timing of Retirement Plan Contributions and Investment Returns: The Case of Defined Benefit versus Defined Contribution
- Green Jobs and Renewable Electricity Policies: Employment Impacts of Ontario's Feed-in Tariff
- Equilibrium Vertical Integration with Complementary Input Markets
- The Role of Specific Subjects in Education Production Functions: Evidence from Morning Classes in Chicago Public High Schools
- Provision of Multilevel Public Goods by Positive Externalities: Experimental Evidence
- Stem Cell Donor Matching for Patients of Mixed Race
- When Educators Are the Learners: Private Contracting by Public Schools
- Human Capital Formation and Criminal Behavior: The Role of Early Childhood Education
- Experience Benefits and Firm Organization
- Regulating Unverifiable Quality by Fixed-Price Contracts
- Pseudo-Adversarialism: A Theoretical Comparison Between the U.S. and Japanese Criminal Procedures
- Asymmetric Information And Overeducation
- Competitive Mixed Bundling of Vertically Differentiated Products
- Therapeutic Equivalence and the Generic Competition Paradox
- Does Vertical Separation Necessarily Reduce Quality Discrimination and Increase Welfare?
- Doctors' Remuneration Schemes and Hospital Competition in a Two-Sided Market
- Corporate Social Responsibility for Irresponsibility
- Hypothetical Bias in Choice Experiments: Is Cheap Talk Effective at Eliminating Bias on the Intensive and Extensive Margins of Choice?
- Matching, Wage Rigidities and Efficient Severance Pay
- The Prostitute's Allure: The Return to Beauty in Commercial Sex Work
- The Impact of Inheritances on Heirs' Labor and Capital Income
- Determining Public Provision of Education Services in a Sequential Education Process
- Topics Article
- Demand-Based Cost-of-Children Estimates and Child Poverty
- Organizational Redesign, Information Technologies and Workplace Productivity
- The Effect of Neighborhood Diversity on Volunteering: Evidence From New Zealand
- Price-Dependent Demand in Spatial Models
- Optimal Taxation of Wealth Transfers When Bequests are Motivated by Joy of Giving
- Smaller Pie, Larger Slice: How Bargaining Power Affects the Decision to Bundle
- Collusion in a One-Period Insurance Market with Adverse Selection
- All-You-Can-Eat Buffet: Entry Price, the Fat Tax and Meal Cessation
- Forced Migration and the Effects of an Integration Policy in Post-WWII Germany
- The Effect of Mandated Exclusive Territories in the US Brewing Industry
- Learning-by-Exporting, Introduction of New Products, and Product Rationalization: Evidence from Korean Manufacturing
- Poverty, Informality and the Optimal General Income Tax Policy
- International Environmental Cooperation under Fairness and Reciprocity
- Determinants of Corruption: Government Effectiveness vs. Cultural Norms
- Does More Time Spent Calling Home Correlate with Higher Remittances? Evidence from Migrants in the State of Qatar
- Do Smart Growth Strategies Have a Role in Curbing Vehicle Miles Traveled? A Further Assessment Using Household Level Survey Data
- Ownership and Quality in Markets with Asymmetric Information: Evidence from Nursing Homes
- Constraints in the Demand for Education: What Can we Learn from Subjective Assessments?
- Education, Maternal Smoking, and the Earned Income Tax Credit
- Firms' Investment under Financial and Infrastructure Constraints: Evidence from In-House Generation in Sub-Saharan Africa
- Comparing Benefits and Total Compensation between Similar Federal and Private-Sector Workers
- Do Rising Top Income Shares Affect the Incomes or Earnings of Low and Middle-Income Families?
- Test Measurement Error and Inference from Value-Added Models
- Costs of Engaging in Corruption: Equilibrium with Extortion and Framing
- On the Relationship between Tariff Levels and the Nature of Mergers
- When Do Independent Distributors Undersupply Promotional Services?
- A Theory of Optimal Quality Reports with Inertia
Artikel in diesem Heft
- Frontiers Article
- On the Competitive Effects of Bidding Syndicates
- Advances Article
- Tax Morale and Compliance Behavior: First Evidence on a Causal Link
- A New Look into the Determinants of the Ecological Discount Rate: Disentangling Social Preferences
- Impacts of Family Size on the Family as a Whole: Evidence from the Developing World
- The Inequality Effects of a Dual Income Tax System
- Signaling Creditworthiness in Peruvian Microfinance Markets: The Role of Information Sharing
- Contributions Article
- Cyclicality of Real Wages in Korea
- Graduating High School in a Recession: Work, Education, and Home Production
- A Group-based Wellness Intervention in the Laboratory
- Technology Inertia and the Benefits of Entry
- The Effect of Education on Equity Holdings
- Evaluating Patent Rights With Possible Patent Litigation
- The CPS Redesign's Effects on Measured Unemployment Duration in the Great Recession
- A Patent System with a Contingent Delegation Fee under Asymmetric Information
- The Economic Returns to Good Looks and Risky Sex in the Bangladesh Commercial Sex Market
- Timing of Retirement Plan Contributions and Investment Returns: The Case of Defined Benefit versus Defined Contribution
- Green Jobs and Renewable Electricity Policies: Employment Impacts of Ontario's Feed-in Tariff
- Equilibrium Vertical Integration with Complementary Input Markets
- The Role of Specific Subjects in Education Production Functions: Evidence from Morning Classes in Chicago Public High Schools
- Provision of Multilevel Public Goods by Positive Externalities: Experimental Evidence
- Stem Cell Donor Matching for Patients of Mixed Race
- When Educators Are the Learners: Private Contracting by Public Schools
- Human Capital Formation and Criminal Behavior: The Role of Early Childhood Education
- Experience Benefits and Firm Organization
- Regulating Unverifiable Quality by Fixed-Price Contracts
- Pseudo-Adversarialism: A Theoretical Comparison Between the U.S. and Japanese Criminal Procedures
- Asymmetric Information And Overeducation
- Competitive Mixed Bundling of Vertically Differentiated Products
- Therapeutic Equivalence and the Generic Competition Paradox
- Does Vertical Separation Necessarily Reduce Quality Discrimination and Increase Welfare?
- Doctors' Remuneration Schemes and Hospital Competition in a Two-Sided Market
- Corporate Social Responsibility for Irresponsibility
- Hypothetical Bias in Choice Experiments: Is Cheap Talk Effective at Eliminating Bias on the Intensive and Extensive Margins of Choice?
- Matching, Wage Rigidities and Efficient Severance Pay
- The Prostitute's Allure: The Return to Beauty in Commercial Sex Work
- The Impact of Inheritances on Heirs' Labor and Capital Income
- Determining Public Provision of Education Services in a Sequential Education Process
- Topics Article
- Demand-Based Cost-of-Children Estimates and Child Poverty
- Organizational Redesign, Information Technologies and Workplace Productivity
- The Effect of Neighborhood Diversity on Volunteering: Evidence From New Zealand
- Price-Dependent Demand in Spatial Models
- Optimal Taxation of Wealth Transfers When Bequests are Motivated by Joy of Giving
- Smaller Pie, Larger Slice: How Bargaining Power Affects the Decision to Bundle
- Collusion in a One-Period Insurance Market with Adverse Selection
- All-You-Can-Eat Buffet: Entry Price, the Fat Tax and Meal Cessation
- Forced Migration and the Effects of an Integration Policy in Post-WWII Germany
- The Effect of Mandated Exclusive Territories in the US Brewing Industry
- Learning-by-Exporting, Introduction of New Products, and Product Rationalization: Evidence from Korean Manufacturing
- Poverty, Informality and the Optimal General Income Tax Policy
- International Environmental Cooperation under Fairness and Reciprocity
- Determinants of Corruption: Government Effectiveness vs. Cultural Norms
- Does More Time Spent Calling Home Correlate with Higher Remittances? Evidence from Migrants in the State of Qatar
- Do Smart Growth Strategies Have a Role in Curbing Vehicle Miles Traveled? A Further Assessment Using Household Level Survey Data
- Ownership and Quality in Markets with Asymmetric Information: Evidence from Nursing Homes
- Constraints in the Demand for Education: What Can we Learn from Subjective Assessments?
- Education, Maternal Smoking, and the Earned Income Tax Credit
- Firms' Investment under Financial and Infrastructure Constraints: Evidence from In-House Generation in Sub-Saharan Africa
- Comparing Benefits and Total Compensation between Similar Federal and Private-Sector Workers
- Do Rising Top Income Shares Affect the Incomes or Earnings of Low and Middle-Income Families?
- Test Measurement Error and Inference from Value-Added Models
- Costs of Engaging in Corruption: Equilibrium with Extortion and Framing
- On the Relationship between Tariff Levels and the Nature of Mergers
- When Do Independent Distributors Undersupply Promotional Services?
- A Theory of Optimal Quality Reports with Inertia