Vertical integration, collusion, and tariffs

  1. Pedro Mendi 1
  2. Rafael Moner-Colonques 2
  3. José J. Sempere-Monerris 2
  1. 1 Universidad de Navarra
    info

    Universidad de Navarra

    Pamplona, España

    ROR https://ror.org/02rxc7m23

  2. 2 Universitat de València
    info

    Universitat de València

    Valencia, España

    ROR https://ror.org/043nxc105

Journal:
SERIEs : Journal of the Spanish Economic Association

ISSN: 1869-4195

Year of publication: 2011

Volume: 2

Issue: 3

Pages: 359-378

Type: Article

DOI: 10.1007/S13209-010-0034-3 DIALNET GOOGLE SCHOLAR lock_openOpen access editor

More publications in: SERIEs : Journal of the Spanish Economic Association

Sustainable development goals

Abstract

This article presents a link between tariff rates and industry structure in a dynamic setting. We examine the role of tariffs on final-goods in a firm’s decision to integrate and collude in the presence of competitive imports. It is shown that, under some conditions, the upstream firm has an incentive to engage in vertical integration to introduce profitably a wholesale price above the world input price while not inducing any intermediate or final good imports. Higher tariffs downstream, even with no tariff protection upstream, make this strategy more profitable, and provide a rationale for a positive relationship between tariff protection and vertical integration, which is observed in some industries.

Data source: Dialnet