Jump to contentJump to search

Market Power in Vertically Related Markets (DFG and ANR)

  • Project Period: 01/2009 - 12/2012
  • Funding: German Science Foundation (DFG) and Agence National de la Recherche (ANR)


The classical view of producers selling directly to final consumers is the exception rather than the rule in modern economies. In most markets, producers and consumers interact with each other through retailers and other intermediaries. The typical production structure is, therefore, one of vertical chains, where both sellers and buyers have some degree of market power. The goal of our research project is to gain a deeper understanding on how an explicit account of the vertically separated structure of value chains affects market performance. We focus on the effect of imperfect competition in vertical chains. In particular, we ask how the balance of market power within the vertical structure affects economic efficiency in general and prices, quality, and the product variety of products in particular. Ultimately, our proposed research on vertical chains is meant to lead to robust guidelines for policy makers in the arena of modern competition policy.

The overall project is structured in four modular work packages. In the first work package we deal with the mode of competition in vertical structures, where we focus on the role of price discrimination, resale price maintenance, and collusion. Work package 2 focuses on buyer power; in particular, the determinants of buyer power and its effects on investment incentives and product quality outcomes. In work package 3 we consider complementarities (provoked by one-stop shopping preferences) in the production chain and how they affect integration incentives and location choice. Finally, in work package 4, we analyze the issue of consumers’ imperfect quality information on the organization of vertical chains where we focus on issues of certification and branding of products.

Researchers involved

Cooperation partners

Dr. Stéphane Caprice (Toulouse)
Research Fellow INRA
Toulouse School of Economics (GREMAQ)
Manufacture des Tabacs,
Aile J.J. Laffont 21 allée de Brienne
31000 Toulouse (France)
tel: +33.(0)
e-mail : caprice@toulouse.inra.fr

Prof. Dr. Roland Strausz (HU-Berlin)
Humboldt-Universität zu Berlin
Institut für Mikroökonomische Theorie
Spandauerstraße 1
10178 Berlin (Germany)
tel: +49.(0)30.2093.5676
e-mail: strauszr@wiwi.hu-berlin.de

Already achieved results


Project’s contractor

Responsible for the content: