Product differentiation and vertical integration in presence of double marginalization

In this paper, we present a model of endogenous vertical integration and horizontal differentiation. There exists two output brands and two versions of the input. The only mean for output differentiation is the input version used in output production. Firms may choose to vertically integrate to produce internally the required input version at marginal cost, rather then to buy it at the market price, if that version is made available. We show that vertical mergers increase the possibility that output goods are differentiated. Moreover, this occurs when the cost to differentiate the input is high. On the other hand, vertical integration is detrimental for brand variety if the cost to differentiate inputs is negligible.horizontal differentiation, vertical agreements, successive Cournot oligopolies

Competitive in successive markets : entry and mergers

This paper analyses successive markets where the intra-market linkage depends on the technology used to produce the final output. We investigate entry of new firms, when entry obtains by expanding the economy as well as collusive agreements between firms. We highlight the differentiated effects of entry corresponding to a constant or decreasing returns, free entry in both markets does not entail the usual tendency for the input price to adjust to its marginal cost while it does under constant returns. Then, we analyse collusive agreements by stressing the role of upstream linkage on the profitability of horizontal mergers à la Salant, Switzer and ReynoldsOligopoly, entry, horizontal collusion, foreclosure

Ethnocentric preferences and the environment with international trade

We define a model of international trade with two countries, two vertically differentiated goods, and heterogenous consumers concerning their willingness to pay for quality. Trade generates two sources of pollution: the production of domestic and traded goods, and their transportation between countries. Consumers in both countries manifest home bias which translates into ethnocentric preferences: (i) consumer perceive the quality of the domestic good amplified; and (ii) consumers thrive additional satisfaction when consuming a domestic good rather than a foreign one since only the former can satisfy their sense of place. By contrast, they suffer a psychological penalty when consuming a foreign product. We investigate the role of trade costs and ethnocentric attitude in shaping the equilibrium configuration of the international duopoly. Finally, we uncover the environmental damage from production and from transport in presence of ethnocentrism

Successive oligopolies and decreasing returns

In this paper, we propose an example of successive oligopolies where the downstream firms share the same decreasing returns technology of the Cobb-Douglas type. We stress the differences between the conclusions obtained under this assumption and those resulting from the traditional example considered in the literature, namely, a constant returns technology.successive oligopolies, vertical integration, technology.

A note on successive oligopolies and vertical mergers

In this paper we analyze how the technology used by downstream firms can influence input and output market prices. We show via an example that both these prices increase under a decreasing returns technology while the countrary holds when the technology is constant.successive oligopolies, vertical integration, technology, foreclosure

On tax competition, public goods provision and jurisdictions’ size

tax competition, public goods competition, spatial competition, foreign direct investments, country size