The Strategic Choice of Location and Transport Mode in a Successive Monopoly Model |
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| Authors: | Barnali Gupta John S Heywood & Debashis Pal |
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| Institution: | Department of Economics, Miami University, Oxford, Ohio,;Department of Economics, University of Wisconsin, Milwaukee,;Department of Eonomics, University of Cincinnati, Cincinnati, Ohio |
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| Abstract: | This work emphasizes the incentives for vertical integration in a spatial model. A downstream monopoly will both strategically increase its transport costs and locate inefficiently relative to its customers. This forces the upstream monopolist to lower its input price rather than permit sales to decline. The excess costs and the inefficient location lower total profit in the vertical stream generating an incentive for vertical integration. |
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