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    Incentives for Sabotage in Vertically Related Industries

    Mandy, David M.
    Sappington, David E. M.
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    [PDF] IncentivesSabotageVerticallyRelatedIndustries.pdf (1.175Mb)
    Date
    2004
    Format
    Working Paper
    Metadata
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    Abstract
    We show that the incentives a vertically integrated supplier may have to disadvantage or "sabotage" the activities of downstream rivals vary with both the type of sabotage and the nature of downstream competition. Cost-increasing sabotage is typically profitable under both Cournot and Bertrand competition. In contrast, demand-reducing sabotage is often profitable under Cournot competition, but unprofitable under Bertrand competition. Incentives for sabotage can vary non-monotonically with the degree of product differentiation.
    URI
    http://hdl.handle.net/10355/2713
    Part of
    Working papers (Department of Economics);WP 04-04
    Part of
    Economics publications
    Citation
    Department of Economics, 2004
    Rights
    OpenAccess.
    This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License.
    Collections
    • Economics publications (MU)

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