Strategic Buying or Selling?: The Behavior of Vertically-Integrated Firms in the Intermediate Goods Market

Strategic Buying or Selling?: The Behavior of Vertically-Integrated Firms in the Intermediate Goods Market

This paper considers a successive oligopoly model in which a vertically-intergrated firm(VI firm) can buy or sell intermediate goods. We find that when there are only a small number of VI firms in the market, they tend to buyor even to store up intermediate goods. In our setting, a vertical merger wil l not result in market foreclosure and it always in creases social welfare.

Ⅰ. Introduction

Ⅱ. The Model

Ⅲ. The Behavior of VI Firms: Strategic Buying or Strategic Selling

Ⅳ. Vertical Merger

Ⅴ. Conclusion

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