Incentives for Sabotage in Vertically Related Industries

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Incentives for Sabotage in Vertically Related Industries

Please use this identifier to cite or link to this item: http://hdl.handle.net/10355/2713

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Title: Incentives for Sabotage in Vertically Related Industries
Author: Mandy, David M.; Sappington, David E. M.
Date: 2004
Publisher: Department of Economics
Citation: Department of Economics, 2004
Series/Report no.: Working papers (Department of Economics);WP 04-04
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

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  • Economics publications (MU) [120]
    The items in this collection are the scholarly output of the faculty, staff, and students of the Department of Economics.

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