How Does Market Size Affect Vertical Structure When Considering Vertical Coordination? Application to the Railway Industry

Abstract

We provide a theoretical framework to discuss the relation between market size and vertical structure in the railway industry. The framework is based on a simple downstream monopoly model with two input suppliers: the labour force and the rail infrastructure firm. The operation of the downstream firm (i.e. the train operating firm) imposes costs on the rail infrastructure firm. We show that the downstream firm with a larger market size is more likely to integrate with the rail infrastructure firm. This is consistent with the phenomenon in the railway industry.

Participation of Ordinary Investors and Stock Market Quality: A Comparison between Japanese and US Markets

“…Hu and Mino () examine the relationship between capital accumulation and transformation of industrial structure from the market quality perspective. Matsushima and Mizutani () examine market quality in the railway industry. Mizoguchi and Quyen () examine the quality of public procurement market.…”