Wholesale Competition and Open Access Regimes: Experimental Evidence

Horstmann, Niklas; Krämer, Jan; Schnurr, Daniel

doi:10.2139/ssrn.2630660

Cited by 1 publication

(1 citation statement)

References 53 publications

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“…This result is similar to one of the main points of our paper-more complex contractual arrangements can lead to downstream entry-but the underlying mechanism is different. Horstmann et al (2017) conduct an experiment where downstream foreclosure arises even though the parameter range that is chosen for the experiment predicts competition at the upstream segment as a unique equilibrium when contracts are observable. The setup of their experiment uses real-time moves, which more accurately describes a scenario in which upstream agreements are not (immediately) observable.…”

Section: Related Literaturementioning

confidence: 99%

Upstream Competition with Complex and Unobservable Contracts

2020

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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.

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Section: Related Literaturementioning

confidence: 99%