A Strategic Entry Game by an Independent Downstream Firm : Independent subsidiary vs. Integration

概要

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This paper studies a strategic input market entry by an independent downstream firm with a successive oligopoly model. When an independent downstream firm enters into the input market, it decides between internal supplier (=integration) and outside supplier (=independent subsidiary). Independent subsidiary entry does not have any influence on the input and output markets. However, the input market entry strategy depends on the number of downstream firms. If the number of downstream firms exceeds the threshold level, the independent downsteam firm moves towards having an outside supplier. However, if the number of downstream firms is sufficiently small, it chooses inside supplier.