Location of Repository

Vertical integration and product innovation

By Arijit Mukherjee and Piercarlo Zanchettin


We study vertical integration and product innovation (in the form of horizontal product\ud differentiation) as interdependent strategic choices of vertically related firms. We consider\ud product innovation in the downstream market as a strategic decision of innovative firms\ud facing a threat of vertical integration and market foreclosure by an upstream monopolist.\ud Our main finding is that, although product differentiation allows to soften product market\ud competition and to avoid market foreclosure, the downstream market may prefer less\ud product differentiation to deter vertical integration. Therefore, less product innovation\ud can be a possible social cost of a lenient antitrust policy

Topics: Vertical Integration, product innovation, market foreclosure, duopoly
Publisher: Dept. of Economics, University of Leicester
Year: 2007
OAI identifier: oai:lra.le.ac.uk:2381/7469

Suggested articles



  1. (2007). A premier on forclosure,
  2. (1998). Anticompetitive vertical integration by a dominant firm,
  3. (1978). Antitrust Paradox, doi
  4. Competitive effects of vertical integration, forthcoming in P. Buccirossi (Ed.), Handbook of Antitrust Economics,
  5. (2003). Downstream R&D, raising rivals’ costs, and input price contracts, doi
  6. (1990). Equilibrium vertical foreclosure,
  7. (2007). Intimidating competitors - Endogenous vertical integration and downstream investment in successive oligopoly, doi
  8. (2001). On vertical mergers and their competitive effects, doi
  9. (2007). Outsourcing, vertical integration, and price vs. quantity competition, doi
  10. (2001). Product differentiation and upstreamdownstream relations, doi
  11. (2003). Product differentiation in successive vertical oligopolies, doi
  12. (2002). Product differentiation, process R&D, and the nature of market competition, doi
  13. (1998). Product homogeneity as a prisoner’s dilemma in a duopoly with R&D, doi
  14. (1999). Quality choice and vertical integration, doi
  15. (2004). Technology of upstream firms and equilibrium product differentiation, doi
  16. (1998). The incentive for non-price discrimination by an input monopolist, doi
  17. (1994). The incentive for vertical integration,
  18. (2001). Vertical integration and competition policy,
  19. (1990). Vertical integration and market foreclosure, doi
  20. (2003). Vertical Integration and the incentive to innovate, doi
  21. (2004). Vertical integration with capital precommitment: monopolization vs. inefficiency, doi
  22. Vertical integration, exclusive dealing, and ex post cartelization, doi
  23. (1988). Vertical mergers and market foreclosure, doi
  24. (1995). Vertical vs. Horizontal integration: pre-emptive merging, doi

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.