Backward partial vertical integration through private placement

Detalhes bibliográficos
Autor(a) principal: Gonçalves, Ricardo
Data de Publicação: 2023
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10400.14/42367
Resumo: We analyze the market impact of a partial vertical integration whereby a subset of retail firms acquire, through a private placement operation, a non-controlling stake in the capital of an upstream firm, which supplies an essential input. In addition, we assume that this upstream firm can price discriminate between the retail firms which (now) own a stake in its capital and all of their retail rivals. We find that price discrimination is optimal and, compared to a vertical separation scenario, there is input foreclosure, a higher retail price, and lower social welfare, which suggests that, from a competition policy viewpoint, such partial vertical integrations should be analyzed with particular concern. On the other hand, incentives are such that conducting a private placement operation of the upstream firm’s capital yields gains from trade, and we are able to identify the optimal characteristics of such an operation.
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spelling Backward partial vertical integration through private placementInput foreclosurePartial vertical integrationPrice discriminationPrivate placementWe analyze the market impact of a partial vertical integration whereby a subset of retail firms acquire, through a private placement operation, a non-controlling stake in the capital of an upstream firm, which supplies an essential input. In addition, we assume that this upstream firm can price discriminate between the retail firms which (now) own a stake in its capital and all of their retail rivals. We find that price discrimination is optimal and, compared to a vertical separation scenario, there is input foreclosure, a higher retail price, and lower social welfare, which suggests that, from a competition policy viewpoint, such partial vertical integrations should be analyzed with particular concern. On the other hand, incentives are such that conducting a private placement operation of the upstream firm’s capital yields gains from trade, and we are able to identify the optimal characteristics of such an operation.Veritati - Repositório Institucional da Universidade Católica PortuguesaGonçalves, Ricardo2023-09-14T16:01:29Z2023-08-122023-08-12T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.14/42367eng1566-167910.1007/s10842-023-00403-485167804222001046958200001info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-09-19T01:42:26Zoai:repositorio.ucp.pt:10400.14/42367Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T20:29:34.794365Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv Backward partial vertical integration through private placement
title Backward partial vertical integration through private placement
spellingShingle Backward partial vertical integration through private placement
Gonçalves, Ricardo
Input foreclosure
Partial vertical integration
Price discrimination
Private placement
title_short Backward partial vertical integration through private placement
title_full Backward partial vertical integration through private placement
title_fullStr Backward partial vertical integration through private placement
title_full_unstemmed Backward partial vertical integration through private placement
title_sort Backward partial vertical integration through private placement
author Gonçalves, Ricardo
author_facet Gonçalves, Ricardo
author_role author
dc.contributor.none.fl_str_mv Veritati - Repositório Institucional da Universidade Católica Portuguesa
dc.contributor.author.fl_str_mv Gonçalves, Ricardo
dc.subject.por.fl_str_mv Input foreclosure
Partial vertical integration
Price discrimination
Private placement
topic Input foreclosure
Partial vertical integration
Price discrimination
Private placement
description We analyze the market impact of a partial vertical integration whereby a subset of retail firms acquire, through a private placement operation, a non-controlling stake in the capital of an upstream firm, which supplies an essential input. In addition, we assume that this upstream firm can price discriminate between the retail firms which (now) own a stake in its capital and all of their retail rivals. We find that price discrimination is optimal and, compared to a vertical separation scenario, there is input foreclosure, a higher retail price, and lower social welfare, which suggests that, from a competition policy viewpoint, such partial vertical integrations should be analyzed with particular concern. On the other hand, incentives are such that conducting a private placement operation of the upstream firm’s capital yields gains from trade, and we are able to identify the optimal characteristics of such an operation.
publishDate 2023
dc.date.none.fl_str_mv 2023-09-14T16:01:29Z
2023-08-12
2023-08-12T00:00:00Z
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