Strategic Reaction of Vertically Integrated Firms to Downstream Entry: Deterrence or Accommodation |
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| Authors: | Jae-Do Song Jae-Cheol Kim |
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| Institution: | (1) Network R&D Center, Network R&D Center, SKTelecom, 9-1 Sunae-dong, Pundang-gu, Sungnam City, Kyonggi-do, 463-784, Korea;(2) Korea Advanced Institute of Science and Technology, Graduate School of Management, Korea Advanced Institute of Science and Technology, Cheongryangri-dong, Dongdaemun-gu, Seoul, 132-012, Korea |
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| Abstract: | The purpose of this paper is to analyze strategic behavior of vertically integrated firms when there is downstream entry, taking into account the balance between  competition in the market and competition for the market. This analysis can serve to explain diverse distributional structures, including the coexistence of vertically integrated firms and independent retailers. And it shows that the relative efficiency of downstream entrants and the level of competition among incumbents are two major factors in determining equilibrium configuration. |
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