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Olivier Bonroy and Bruno Larue
''Forward Vertical Integration: The Fixed-Proportion Case Revisited''
( 2007, Vol. 12 No.25 )
Assuming a fixed-proportion downstream production technology, partial forward integration by an upstream monopolist may be observed whether the monopolist is advantaged or disadvantaged cost-wise relative to fringe firms in the downstream market. Integration need not induce cost-predation and the profits of the fringe may increase. The output price falls and welfare unambiguously rises.
JEL: L2 - Firm Objectives, Organization, and Behavior: General
Manuscript Received : Sep 06 2007 Manuscript Accepted : Oct 05 2007

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