Jump to ContentJump to Main Navigation
Show Summary Details
More options …

The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

4 Issues per year


IMPACT FACTOR 2016: 0.252
5-year IMPACT FACTOR: 0.755

CiteScore 2016: 0.48

SCImago Journal Rank (SJR) 2016: 0.330
Source Normalized Impact per Paper (SNIP) 2016: 0.526

Online
ISSN
1935-1682
See all formats and pricing
More options …
Volume 12, Issue 1 (Jun 2012)

Issues

Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

Equilibrium Vertical Integration with Complementary Input Markets

Noriaki Matsushima / Tomomichi Mizuno
Published Online: 2012-06-22 | DOI: https://doi.org/10.1515/1935-1682.3118

Abstract

We provide a model to investigate vertical integration decisions. This model assumes that local downstream manufacturers require two inputs to make their final products. One input is produced by a supplier shared by both manufacturers; another is produced by an exclusive supplier for each manufacturer. We show that vertical integration of each downstream firm with its exclusive supplier enhances the input demand for the common supplier, leading to an increase in the common supplier's input price due to the elimination of the double marginalization. Moreover, downstream firms that require a smaller quantity of inputs from the common supplier, for instance, those with efficient production technology or smaller downstream demand, are more likely to vertically integrate because vertical integration yields a smaller increase in input price. Thus, the cause of firm-size heterogeneity is important to consider when investigating the relationship between firm size and the tendency to vertically integrate.

Keywords: vertical integration; complementary inputs; firm size; technology

About the article

Published Online: 2012-06-22


Citation Information: The B.E. Journal of Economic Analysis & Policy, ISSN (Online) 1935-1682, DOI: https://doi.org/10.1515/1935-1682.3118.

Export Citation

©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston. Copyright Clearance Center

Citing Articles

Here you can find all Crossref-listed publications in which this article is cited. If you would like to receive automatic email messages as soon as this article is cited in other publications, simply activate the “Citation Alert” on the top of this page.

[1]
Markus Reisinger and Emanuele Tarantino
The RAND Journal of Economics, 2015, Volume 46, Number 3, Page 461
[2]
Noriaki Matsushima and Fumitoshi Mizutani
Pacific Economic Review, 2014, Volume 19, Number 5, Page 657
[3]
Noriaki Matsushima and Tomomichi Mizuno
European Journal of Operational Research, 2013, Volume 228, Number 1, Page 208

Comments (0)

Please log in or register to comment.
Log in