Buyers’ Miscoordination, Entry and Downstream Competition

Datos Bibliográficos

ID9713641
AutoresChiara Fumagalli (0000-0002-5402-162X, Università Bocconi and CSEF), Massimo Motta (0000-0003-1848-8713, European University Institute, and Università di Bologna)
Año2008
Volumen118
Número531
Páginas1196-1222
Fecha de publicación2008-08-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaThe Economic Journal (JOURNAL)
Identificadores de la revistaISSN: 0013-0133 • E-ISSN: 1468-0297
EditorialOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2008.02166.x
OpenAlexW2139977684
IdiomaEN
Citas recibidas2
Referencias citadas21

This article shows that buyers' coordination failures might prevent entry in an industry with an incumbent firm and a more efficient potential entrant. If there were a single buyer, or if all buyers formed a central purchasing agency, coordination failures would be avoided and efficient entry would always occur. More generally, exclusion is less likely the lower the number of buyers. For any given number of buyers, exclusion is less likely the more fiercely buyers compete in the downstream market. First, intense competition may prevent miscoordination equilibria from arising; second, in cases where miscoordination equilibria still exist, it lowers the maximum price that the incumbent can sustain at such exclusionary equilibria. Copyright (C) The Author(s). Journal compilation (C) Royal Economic Society 2008

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