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From course:

Industrial Organisation 2022

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Question:

Why does Chicago school consider foreclosure irrelevant?

Author: Hjalmer Pedersen



Answer:

Chicago school has argued that foreclosure or vertical integration is of little effect if downstream market is competitive. Refusal to supply or vertical integration does not change the overall monopoly rent for the producer or the combined firm. Recall the case Monopoly producer – competitive retailer when we talked about double mark-ups


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