Vertical Integration and International Predation |
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| Authors: | Daniel M. Bernhofen |
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| Affiliation: | Bernhofen: Clark University, Worcester. MA 01610 USA. Tel: 508-793-7353, Fax: 793-8849, Email: . This paper is based on a chapter of my Ph.D. dissertation at Syracuse Univer-sity. Iam grateful to J. David Richardson. Zhiqi Chen. Taiji Furusawa, Susan Gensemcr. Douglas Holtz-Eakin, Lu Hong, Jerry Kelly, Kai-Uwe Kühn. Mary Lovely, Douglas Nelson, and an anonymous referee for many helpful comments. |
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| Abstract: | This paper investigates the interrelationship between a firm's incentive to engage in international predatory pricing and its domestic vertical industry ties in the context of the deep-pockct theory of predation. The deep pocket stems from a vertically integrated firm's ability to shift funds between its upstream and downstream divisions. enabling it to prey on vertically unintegrated upstream competitors. Vertical integration is shown to function as a cause of and a deterrent to foreign predatory behavior. |
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