Skip to main content
Article thumbnail
Location of Repository

Equilibrium structures in vertical oligopoly

By Masahiro Abiru, Babu Nahata, Subhashis Raychaudhuri and Michael Waterson


The central purpose of this paper is to examine vertical integration as an equilibrium phenomenon. We model it as integration between Cournot oligopolists in both the upstream and the downstream stages. We consider the issue of private profitability versus collective profitability and show that under several situations the equilibrium outcomes may result in a Prisoner's dilemma. The analysis is extended to consider equilibrium outcomes in a dynamic setting, where we find no integration to be a relatively common outcome.

OAI identifier:

Suggested articles


  1. (1998). Abiru et al./J.
  2. (1975). Case studies in competition policy,
  3. (1990). Comment on Hart and Tirole,
  4. (1996). Double marginalization and vertical integration: New lesson from extensions of the classic case.
  5. (1990). Equilibrium vertical foreclosure.
  6. (1993). Incomplete contracts, vertical integration and supply assurance.
  7. (1988). Oligopoly and vertical integration:
  8. (1990). Scale and Scope, the Dynamics of Industrial Capitalism,
  9. (1992). Strategy and transaction costs: The organization of distribution in the carbonated softdrink industry.
  10. (1986). The costs and benefits of ownership: A theory of vertical and lateral integration.
  11. (1987). The role of ideas in antitrust policy toward vertical mergers: Evidence from the FTC cement-ready mixed concrete cases.
  12. (1990). Vertical integration and market foreclosure,
  13. (1979). Vertical integration of successive oligopolies.
  14. (1996). Vertical integration, foreclosure and profit in the presence of double marginalization.
  15. (1988). Vertical integration, variable proportions and successive oligopolies.
  16. (1995). Vertical market participation, Paper Presented at the European Economic Association's Meeting,
  17. (1988). Vertical merger and market foreclosure.
  18. (1995). Vertical mergers and selective price cutting.
  19. (1988). Vertical separation.
  20. (1995). Vertical vs. horizontal integration: Pre-emptive merging.

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