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Type	Working Paper
Scope	Discipline-based scholarship
Title	Intimidating Competitors Endogenous Vertical Integration and Downstream Investment in Successive Oligopoly
Organization Unit	Microeconomics, Industrial Organization, and Environmental Economics (Armin Schmutzler)
Authors	Stefan Buehler Armin Schmutzler
Language	English
Institution	University of Zurich
Series Name	Working paper series / Socioeconomic Institute
Number	No. 409
Date	2005
Abstract Text	We examine the interplay of endogenous vertical integration and costreducing downstream investment in successive oligopoly. We start from a linear Cournot model to motivate our more general reducedform framework. For this general framework, we establish the following main results: First, vertical integration increases own investment and decreases competitor investment (intimidation effect). Second, asymmetric equilibria typically involve integrated firms that invest more into effciency than their separated counterparts. Our findings suggest that asymmetric vertical integration is a potential explanation for the initial difference between leader and laggard in investment games.
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