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Competition policy, parity regulation and self‐sabotage

Competition policy, parity regulation and self‐sabotage This article analyzes the incentives for a vertically‐integrated producer (VIP) to engage in “self‐sabotage”. Self‐sabotage occurs when a VIP intentionally increases its upstream costs of production. This article explains why self‐sabotage may be profitable for a VIP even though it raises symmetrically the cost of the upstream product to all downstream producers. Identifies conditions under which self‐sabotage enables a VIP to disadvantage downstream rivals differentially without violating parity requirements. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png info Emerald Publishing

Competition policy, parity regulation and self‐sabotage

info , Volume 6 (1): 5 – Feb 1, 2004

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Publisher
Emerald Publishing
Copyright
Copyright © 2004 Emerald Group Publishing Limited. All rights reserved.
ISSN
1463-6697
DOI
10.1108/14636690410535926
Publisher site
See Article on Publisher Site

Abstract

This article analyzes the incentives for a vertically‐integrated producer (VIP) to engage in “self‐sabotage”. Self‐sabotage occurs when a VIP intentionally increases its upstream costs of production. This article explains why self‐sabotage may be profitable for a VIP even though it raises symmetrically the cost of the upstream product to all downstream producers. Identifies conditions under which self‐sabotage enables a VIP to disadvantage downstream rivals differentially without violating parity requirements.

Journal

infoEmerald Publishing

Published: Feb 1, 2004

Keywords: Sabotage; Production costs; Competitive strategy

References