Foreclosure and tunneling with partial vertical ownership

Arbeitspapier

We study the incentives of firms that hold partial vertical ownership to foreclose rivals. Compared to a full vertical merger, with partial ownership, a firm may obtain only part of the target's profit but may nevertheless be able to influence the target's strategy significantly. The target may be either a supplier or a customer, which opens the scope for either input foreclosure or customer foreclosure. We show that the incentives to foreclose can be higher, equal, or even lower with partial ownership than with a vertical merger, depending on how the protection of minority shareholders and transfer price regulations are specified.

Object Details

• ISBN: 978-3-86304-390-2
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DICE Discussion Paper ; No. 391

Classification and Topics

• Classification: Wirtschaft ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Firm Organization and Market Structure ; Antitrust Issues and Policies: General
• Subject: Backward ownership ; Entry deterrence ; Foreclosure ; Minority shareholdings ; Partial ownership ; Uniform pricing ; Vertical integration

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hunold, Matthias ; Petrishcheva, Vasilisa
• Event: Veröffentlichung
• (who): Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
• (where): Düsseldorf
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/265095
• Last update: 10.03.2025, 11:41 AM CET