The impact of vertical integration on losses from collusion |
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| Institution: | 1. SKEMA Business School – Université Côte d’Azur, 60 Rue Fedor Dostoievski, Sophia Antipolis 06902, France;2. CREST, École polytechnique, Institut Polytechnique de Paris, 5 avenue Henry Le Chatelier, Palaiseau 91120, France;1. Goethe-Universität Frankfurt, Theodor-W.-Adorno-Platz 4, Frankfurt 60323, Germany;2. Düsseldorf Institute for Competition Economics (DICE), Heinrich-Heine-Universität Düsseldorf, Universitätsstr. 1, Düsseldorf 40225, Germany;1. Johannes Kepler University Linz, Wifo Wien; IZA, Bonn, CESifo Munich, Germany;2. Johannes Kepler University Linz, Germany;1. Loughborough University, Epinal Way, Loughborough LE11 3TU, United Kingdom;2. School of Economics and Centre for Competition Policy, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, United Kingdom;3. Centre for Competition Policy, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, United Kingdom |
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| Abstract: | Upstream collusion that increases the price of an input can harm an independent downstream producer (D). We ask whether this harm is more or less pronounced when D’s downstream rival is a vertically integrated producer. We find that such vertical integration increases D’s loss from collusion when D is not a particularly strong competitor. However, when D is a sufficiently strong competitor, vertical integration can reduce D’s loss from collusion when price competition prevails downstream. |
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