Targeting efforts to raise rivals' costs: Moving from “Whether” to “Whom” |
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Institution: | 1. University of Missouri, United States;2. Georgetown University, United States;3. University of Florida, United States |
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Abstract: | Considerable attention has been devoted to determining when a vertically integrated provider (VIP) of an essential input will disadvantage its rivals anticompetitively. In contrast, little attention has been devoted to identifying which of its rivals a VIP will target for cost-raising activities. We identify industry and firm characteristics that render a particular rival a more likely target for a VIP's cost-raising activities. The potential for targeted “sabotage” introduces many subtleties, including the fact that a VIP typically prefers to sabotage an industry leader under retail quantity competition but an industry follower under price competition. |
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