Upstream Competition with Complex and Unobservable Contracts
| Autor: | Toker Doganoglu, Izak Atiyas, Firat Inceoglu |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
Upstream (petroleum industry)
Flexibility (engineering) Organizational Behavior and Human Resource Management Economics and Econometrics Strategy and Management media_common.quotation_subject 05 social sciences jel:L40 Outcome (game theory) Unobservable Vertical integration Competition (economics) Microeconomics jel:L42 Downstream (manufacturing) Management of Technology and Innovation jel:L13 0502 economics and business ddc:330 Business 050207 economics Welfare 050205 econometrics media_common |
| Zdroj: | Review of Industrial Organization. 58:399-429 |
| ISSN: | 1573-7160 0889-938X |
| DOI: | 10.1007/s11151-020-09766-y |
| Popis: | This paper examines situations where two vertically integrated firms consider supplying an input to an independent downstream competitor via privately observed contracts. We identify equilibria where competition in the upstream market emerges—the downstream competitor gets supplied—as well as when the downstream firm does not receive the input and is excluded from the market. The likelihood of the outcome in which the downstream firm does not get supplied depends not only on demand parameters, but also on contractual flexibility and observability. We show that when contracts are unobservable, downstream entry will occur less often. Furthermore, our results suggest that permitting contracts that enable the contracting parties to coordinate their behavior in the downstream market may improve welfare by increasing the likelihood that the downstream firm is supplied. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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