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Abstract: Vertical Integration and Competition Between Networks
Abstract
Vertical Integration and Competition Between Networks
The Review of Network Economics
Vol. 4, Issue 1 - March 2005, pp 4 - 18
Author
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Catherine C. de Fontenay
Melbourne Business School and Department of Economics, University of Melbourne
Joshua S. Gans
Melbourne Business School, University of Melbourne
E-mail: [email protected] |
Abstract
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This paper provides a simple model of bargaining and integration within a network and considers
how intra-network structure is impacted on by competition between networks. Apart from its
analytical tractability, our model demonstrates how integration can be used strategically to redistribute
network profits from downstream firms to upstream providers of network services. It also
demonstrates that increased inter-network competition can mitigate incentives for inefficient
integration.
Keywords: vertical integration, bilateral negotiation, bargaining power
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