The Entry Incentives of Complementary Producers: A Simple Model with Implications for Antitrust Policy

8 Pages Posted: 6 Nov 2009

See all articles by Nathan Miller

Nathan Miller

Georgetown University - Robert Emmett McDonough School of Business

Juan Sebastián Lleras

University of California, Berkeley

Date Written: November 5, 2009

Abstract

We model competition between two firms in a vertical upstream-downstream relationship. Each firm can pay a sunk cost to enter the other's market. For equilibria in which both firms enter, the downstream price can be lower than the joint profit maximizing level, and coordination (e.g., through merger) is anticompetitive.

Suggested Citation

Miller, Nathan and Lleras, Juan Sebastián, The Entry Incentives of Complementary Producers: A Simple Model with Implications for Antitrust Policy (November 5, 2009). Available at SSRN: https://ssrn.com/abstract=1500534 or http://dx.doi.org/10.2139/ssrn.1500534

Nathan Miller (Contact Author)

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Juan Sebastián Lleras

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

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