Electronic Resource
350 Main Street , Malden , MA 02148 , USA , and PO Box 1354, 9600 Garsington Road , Oxford OX4 2XG , UK .
:
Blackwell Publishing, Inc.
Journal of economics & management strategy
14 (2005), S. 0
ISSN:
1530-9134
Source:
Blackwell Publishing Journal Backfiles 1879-2005
Topics:
Economics
Notes:
With economies of scale, a vertically integrated firm can lower its upstream cost by supplying downstream competitors. The competitors may strategically choose not to purchase from the integrated firm, unless the latter's price for the intermediate good is sufficiently lower than those of alternative suppliers. In a simple model of dynamic scale economies through learning by doing, equilibrium vertical disintegration occurs if and only if total industry profit is higher under vertical separation than under integration. The model bridges a logical gap in George Stigler's classic theory on vertical organization, and sheds light on the widely observed phenomenon of vertical disintegration.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1111/j.1430-9134.2005.00040.x
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