Munich Personal RePEc Archive

Alliance Partner Choice in Markets with Vertical and Horizontal Externalities

Hattori, Keisuke and Lin, Ming Hsin (2010): Alliance Partner Choice in Markets with Vertical and Horizontal Externalities.

[img]
Preview
PDF
MPRA_paper_25732.pdf

Download (217Kb) | Preview

Abstract

This study investigates the choice between complementary and parallel alliances in a market with vertical and horizontal externalities. One composite goods firm competes with two components producers, each providing a complementary component of a differentiated com- posite good. Although the joint profits from a parallel alliance between the composite goods firm and a components producer are always larger than those from a complementary alliance between components producers, through Nash bargaining, a components producer prefers the complementary (parallel) alliance when the degree of product differentiation is sufficiently large (small). Combined with the result that a complementary alliance is socially preferable, our findings provide meaningful implications for antitrust policy.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.