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

McGowan, Danny (2017) Digging deep to compete: vertical integration, product market competition and prices. Journal of Industrial Economics, 65 (4). pp. 683-718. ISSN 1467-6451

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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.

Item Type: Article
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.wiley.com/doi/10.1111/joie.12157/full This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > Nottingham University Business School
Identification Number: https://doi.org/10.1111/joie.12157
Depositing User: Eprints, Support
Date Deposited: 11 Oct 2017 13:28
Last Modified: 10 Apr 2018 15:44
URI: http://eprints.nottingham.ac.uk/id/eprint/47206

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