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摘要
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We study the impact of input prices on an
entrant’s profit when firms are engaged in multi-product competition. We
consider a setting with both horizontal and vertical differentiation, in
which a vertically integrated firm controls the input that is required for
the supply of the high-quality product. We establish the conditions under
which the entrant is better off from an increase in the wholesale price of
this critical input. This possibility contrasts with the existing literature
that, under linear demands, finds a non-positive relationship between the
input price and the single-product entrant’s profit.
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