TY  - JOUR
A1  - Atiyas, Izak
A1  - Doganoglu, Toker
A1  - Inceoglu, Firat
T1  - Upstream Competition with Complex and Unobservable Contracts
T2  - Review of Industrial Organization
N2  - 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.
KW  - collective refusal to supply
KW  - foreclosure
KW  - unobservable contracts
KW  - upstream competition
Y1  - 2021
UR  - https://opus.bibliothek.uni-wuerzburg.de/frontdoor/index/index/docId/24116
UR  - https://nbn-resolving.org/urn:nbn:de:bvb:20-opus-241161
VL  - 58
ER  -