UA - Université d'Angers : EA7456 (Université d'Angers - 40 Rue de Rennes, BP 73532 - 49035 Angers CEDEX 01 - France)
AGROCAMPUS OUEST (Institut Supérieur des Sciences Agronomiques, Agroalimentaires, Horticoles et du Paysage - 65, rue de St Brieuc - CS 84215 - 35042 Rennes cedex - France)
Abstract : This paper illustrates the effect of market size on the decision of whether or not firms should vertically integrate or disintegrate. We use a model of two successive stages of production with Cournot competition in each stage. In this model, firms choose to specialize (either upstream or downstream) or to integrate the two stages, before making their production decisions. The decision of whether or not to integrate or specialize depends on the trade-off between "escaping from" the double marginalization problem or the gain from specializing in the production stage in which the firm is more efficient. We show (using simulations) that more firms choose to be vertically integrated as the valuation of the final product or the number of consumers increases, unless the number of firms increases proportionately.
https://hal.univ-angers.fr/hal-02816481 Contributeur : Ivan DufeuConnectez-vous pour contacter le contributeur Soumis le : vendredi 25 juin 2021 - 15:22:37 Dernière modification le : jeudi 28 avril 2022 - 16:03:04 Archivage à long terme le : : dimanche 26 septembre 2021 - 22:19:53
Ivan Dufeu. Market Size and Vertical Equilibrium in the Context of Successive Cournot Oligopolies. B.E. Journal in Theoretical Economics, Topics in Theoretical Economics, De Gruyter, 2004, 4 (1), ⟨10.2202/1534-598X.1122⟩. ⟨hal-02816481⟩