TY  - JOUR
CY  - Amsterdam
ID  - publications50387
UR  - http://tse-fr.eu/pub/130288
A1  - Bisceglia, Michele
A1  - Padilla, Jorge
A1  - Piccolo, Salvatore
A1  - Shekhar, Shiva
Y1  - 2022/09//
N2  - We study the competitive effects of a vertical merger in a digital industry where an integrated incumbent (closed ecosystem) competes with an open ecosystem formed by an upstream supplier (ecosystem gatekeeper) and two downstream retailers selling differentiated products. Absent innovation, the incumbent sells a superior product compared to the rivals’ ones. Yet, the gatekeeper of the open ecosystem can fill up this gap by engaging in product innovation. We investigate the impact of vertical integration on the gatekeeper’s incentives to foreclose its non-integrated downstream unit and innovate its ecosystem to compete head-to-head with the incumbent. The vertically integrated gatekeeper raises the costs of the unintegrated competitor to relax intra-ecosystem competition but does not fully foreclose it as that would cause fiercer inter-ecosystem competition. Moreover, vertical integration enhances innovation within the open ecosystem, enabling its participants to catch up with the incumbent. Overall, vertical integration may benefit consumers even when it softens intra-ecosystem competition.
PB  - Elsevier
JF  - Information Economics and Policy
VL  - vol.60
KW  - Competing ecosystems
KW  - Foreclosure
KW  - Innovation
KW  - Vertical mergers
SN  - 0167-6245
TI  - Vertical integration, innovation and foreclosure with competing ecosystems
AV  - none
ER  -