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Vertical Integration and International Predation
Author(s) -
Bernhofen Daniel M.
Publication year - 1996
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.1996.tb00086.x
Subject(s) - vertical integration , predatory pricing , competitor analysis , upstream (networking) , context (archaeology) , predation , industrial organization , incentive , downstream (manufacturing) , function (biology) , economics , international economics , business , international trade , microeconomics , ecology , biology , operations management , engineering , management , telecommunications , paleontology , evolutionary biology , monopoly
This paper investigates the interrelationship between a firm's incentive to engage in international predatory pricing and its domestic vertical industry ties in the context of the deep‐pockct theory of predation. The deep pocket stems from a vertically integrated firm's ability to shift funds between its upstream and downstream divisions. enabling it to prey on vertically unintegrated upstream competitors. Vertical integration is shown to function as a cause of and a deterrent to foreign predatory behavior.