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Digging deep to compete: vertical integration, product market competition and prices

McGowan, Danny

Authors

Danny McGowan danny.mcgowan@nottingham.ac.uk



Abstract

This article establishes a causal effect of product market competition on vertical integration. I exploit a hitherto unexplored natural experiment in the US coal mining industry and a unique mine-level organizational data set. Following an exogenous increase in product market competition the incidence of vertical integration fell by 33% within the treatment group relative to the counterfactual. I find novel evidence that transition to the lower degree of vertical integration is driven by competition reducing market prices by 32% which decreased the incentive to conduct vertical mergers. I discuss several possible interpretations of these changes.

Journal Article Type Article
Publication Date Dec 18, 2017
Journal Journal of Industrial Economics
Print ISSN 0022-1821
Electronic ISSN 1467-6451
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 65
Issue 4
APA6 Citation McGowan, D. (2017). Digging deep to compete: vertical integration, product market competition and prices. Journal of Industrial Economics, 65(4), https://doi.org/10.1111/joie.12157
DOI https://doi.org/10.1111/joie.12157
Publisher URL http://onlinelibrary.wiley.com/doi/10.1111/joie.12157/full
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
Additional Information This is the peer reviewed version of the following article: McGowan, D. (2017), Digging Deep to Compete: Vertical Integration, Product Market Competition and Prices. J Ind Econ, 65: 683–718. doi:10.1111/joie.12157 which has been published in final form at http://onlinelibrary.wi...10.1111/joie.12157/full This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

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Digging Deep to Compete - Vertical Integration Competition Prices JIndE (ACCEPTED VERSION).pdf (620 Kb)
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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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