Upstream-Downstream Specialization by Integrated Firms in a Partially Integrated Industry

Upstream-Downstream Specialization by Integrated Firms in a Partially Integrated Industry We propose a simple model of a partially integrated industry which explicitly takes into account persistent production cost differences across upstream firms, such as one might observe in natural resource industries. The model allows us to highlight the respective roles of strategic considerations and of cost considerations in the determination of an integrated firm's interaction with the non-integrated sector of the industry and, in the end, on its relative upstream-downstream specialization. Some crude stylized facts from the world oil industry are used to motivate and illustrate the analysis. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Upstream-Downstream Specialization by Integrated Firms in a Partially Integrated Industry

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Publisher
Springer Journals
Copyright
Copyright © 1999 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007717513689
Publisher site
See Article on Publisher Site

Abstract

We propose a simple model of a partially integrated industry which explicitly takes into account persistent production cost differences across upstream firms, such as one might observe in natural resource industries. The model allows us to highlight the respective roles of strategic considerations and of cost considerations in the determination of an integrated firm's interaction with the non-integrated sector of the industry and, in the end, on its relative upstream-downstream specialization. Some crude stylized facts from the world oil industry are used to motivate and illustrate the analysis.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 15, 2004

References

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