Vertical Integration, innovation and foreclosure

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Auteurs
Date

2010

Type de document
Périmètre
Langue
Identifiants
Source

HAL SHS (Sciences de l’Homme et de la Société)

Collection

Archives ouvertes

Organisation

Centre pour la communication scientifique directe

Licence

info:eu-repo/semantics/OpenAccess

Mots-clés En

VERTICAL INTEGRATION FORECLOSURE INNOVATION IMITATION FIREWALL VERTICAL INTEGRATION

Sujets proches En

Industries--Vertical integration Integration, Vertical Integration, Vertical

Citer ce document

Marie-Laure Allain et al., « Vertical Integration, innovation and foreclosure », HAL SHS (Sciences de l’Homme et de la Société), ID : 10670/1.ad44af...

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Résumé En

This paper studies the potential effects of vertical integration on downstream firms’incentives to innovate. Interacting efficiently with a supplier may require information exchanges, which raises the concern that sensitive information may be disclosed to rivals. This may be particularly harmful in case of innovative activities, as it increases the risk of imitation. We show that vertical integration exacerbates this threat of imitation, which de facto degrades the integrated supplier’s ability to interact with unintegrated competitors. Vertical integration may thus lead to input foreclosure, thereby raising rivals’ cost and limiting both upstream competition and downstream innovation. A similar concern of customer foreclosure arises in the case of downstream bottlenecks.

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