First-mover advantage reversals under passive cross forward ownership in vertically related markets Articles uri icon

publication date

  • October 2022

start page

  • 303

end page

  • 311

volume

  • 10

International Standard Serial Number (ISSN)

  • 2196-1085

Electronic International Standard Serial Number (EISSN)

  • 2196-1093

abstract

  • We consider a two-tier industry with an upstream monopolist trading, via interim observable linear tariff contracts, with two differentiated goods downstream Stackelberg competitors. The upstream monopolist owns a symmetric minority share on both downstream customers, i.e., there is passive cross forward ownership (PCFO). We show that PCFO may reverse the well-known first-mover advantage of the Stackelberg game. PCFO is also pro-competitive and welfare enhancing.

keywords

  • passive cross forward ownership; vertical relations; linear tariffs; interim observable contracts; stackelberg competition; first mover advantage