Price Discrimination and Forward Integration
Volume: Volume 9, No. 1
Issue: Spring 1978
Pages: pp. 209-217
Authors: Martin K. Perry
Title: Price Discrimination and Forward Integration
Abstract: An input monopolist could price discriminate among all downstream industries by integrating into all but the one with the most inelastic derived demand. We demonstrate that a dominant firm will have a similar incentive to integrate into industries with more elastic derived demands. However, the extent of the fringe of competitive input suppliers will determine the number of such industries into which integration can profitability be maintained.
JEL Classification
Market Structure: Industrial Organization and Corporate Strategy (6110)
Microeconomics Theory of Firm and Industry under Imperfectly Competitive Market Structures (0226)