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On the pro-competitive effects of passive partial backward ownership

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URI: https://hdl.handle.net/10016/33271
ISSN: 2340-5031
UXXI: DT/0000001924
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2021-09-14
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Abstract
We consider a vertically related market in which an upstream monopolist supplier trades, via interim observable two-part tariff contracts, with two differentiated goods' downstream Cournot competitors. We show that passive partial backward ownership (PPBO) may be pro-competitive and welfare enhancing. PPBO exacerbates the upstream's commitment problem and yields lower wholesale prices, and higher industry output, consumers surplus, and welfare than in the absence of PPBO.
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Passive Partial Backward Ownership, Vertical Relations, Two-Part Tariffs, Interim Observable Contracts
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DE - Working Papers. Economics. WE