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When does aftermarket monopolization soften foremarket competition?

Fong, Yuk-fai, Li, Jin and Liu, Ke (2016) When does aftermarket monopolization soften foremarket competition? Journal of Economics and Management Strategy, 25 (4). pp. 852-879. ISSN 1058-6407

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Identification Number: 10.1111/jems.12167

Abstract

This paper investigates firms' abilities to tacitly collude when they each monopolize a proprietary aftermarket. When firms' aftermarkets are completely isolated from foremarket competition, they cannot tacitly collude more easily than single-product firms. However, when their aftermarket power is contested by foremarket competition as equipment owners view new equipment as a substitute for their incumbent firm's aftermarket product, profitable tacit collusion is sustainable among a larger number of firms. Conditions under which introduction of aftermarket competition hinders firms' ability to tacitly collude are characterized.

Item Type: Article
Official URL: http://doi.org/10.1111/jems.12167
Additional Information: © 2016 John Wiley & Sons
Divisions: Management
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Sets: Departments > Management
Date Deposited: 10 Oct 2017 16:12
Last Modified: 19 Nov 2019 12:42
URI: http://eprints.lse.ac.uk/id/eprint/84559

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