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I consider a standard two-stage game of divisionalization in which, in the first stage, two firms choose the number of divisions and, in the second stage, divisions compete independently à la Cournot. Two important assumptions are made. The creation of a division involves a fixed cost, and all divisions sell symmetrically differentiated goods. I obtain that differentiation stimulates the creation of divisions in equilibrium. This effect is so important that prices decrease with the level of product differentiation. As far as welfare is concerned, I obtain that the equilibrium number of divisions is lower than the one that it would maximize social welfare if no intervention at the market stage is feasible.

We evaluate the incentives to create within-industry independent divisions once the vertical structure of the industry is considered. Divisionalization allows a firm to gain market share in the final market, but it also leads to an increase in total payments to the input supplier. The less competitive the upstream market, the more important the second effect will be, and this reduces the profitability of divisionalization. As a consequence, a less competitive upstream segment leads to a lower total number of divisions in equilibrium and a less competitive final market, harming end consumers who will face higher prices.

We assume a multistage oligopoly wherein a given number of innovators compete by selling their substitutive technologies. Each innovator sequentially and independently chooses how many licenses to sell, and subsequently, all licensees compete à la Cournot in the product market. We show that, in equilibrium, the total number of licensees grows exponentially with the number of innovators. In addition, this sequential outcome is also obtained as a subgame perfect Nash equilibrium in pure strategies of a game with endogenous timing. Interestingly, by extending the duopoly model of Badia et al. (Math Soc Sci 108:8–13, 2020) to the case of more than two innovators and exploring pure strategy equilibria instead of mixed strategy equilibria, we derive drastically different policy implications, in terms of patent regulations. Our results suggest that more competition in the upstream market (e.g., by relaxing patent protection against the appearance of similar technologies) tends to increase downstream competition and welfare instead of discouraging or delaying technology adoption. In addition, our analysis is extended to explore the strategic role of public investment in basic R &D.

We study a standard duopoly model of simultaneous divisionalization and Cournot competition, assuming that firms have different marginal costs and divisions are costless. We obtain that in equilibrium only the divisions of the efficient firm are active because price is equal to the marginal cost of the inefficient firm. In the sequential case, however, this “entry-deterrence” strategy is only profitable for the efficient firm when its cost advantage is important enough. So in our setting, both firms coexist in equilibrium only when the cost difference is small enough and divisions are chosen sequentially.

We consider a symmetric homogeneous Cournot duopoly operating under increasing marginal costs. One of the firms owns a patented superior technology that reduces the intercept of the marginal cost function. We compare the incentives of the insider patentee to license the technology to the rival firm either through a fixed fee or through a royalty. We obtain that royalty licensing does not necessarily dominates in our setting: when decreasing returns are important, a royalty is superior only for small enough innovations, whereas a fixed fee is chosen for large innovations. Aditionally, we show that our model is able to replicate the results in Wang (2002), which analyzes the same question in a differentiated duopoly with constant marginal costs.

We consider two manufacturers producing two symmetric and independent goods. They sell them through two undifferentiated retailers (homogeneous retailers). Manufacturers propose linear contracts. Before supply contracts are set by producers, retailers decide whether to be a multi‐product retailer by carrying the two goods or a single product retailer and sell only one good. In this symmetric setting, we find asymmetric retail formats in equilibrium, which results in lower total welfare compared to a situation where both retailers would be multi‐product retailers.

We have two upstream firms producing each one a different good. Demands of the goods are independent, symmetric and linear. Goods are sold to consumers through retailers. The units of both goods sold by retailers cannot exceed the industry selling capacity that it is distributed symmetrically among retailers. Taking as given the industry selling capacity, when the number of retailers decreases, they become bigger in the sense that their selling capacity increases. Therefore, changing the number of retailers, we can check whether the countervailing power theory, that states that bigger retailers obtain better deals from suppliers, holds in our model. We obtain that the lower the number of retailers, the lower the wholesale prices, only when the industry selling capacity is high.

We consider two symmetric upstream firms producing independent goods that sell to consumers through a common retailer. The distinguishing feature of the retailer is that she has a selling capacity, in the sense, that there is an upper limit in the total units of the two goods she can sell. We obtain that the retailer has incentives to reduce her selling capacity in order to increase the pay-off she obtains in the vertical structure.

We analyze merger policy in an industry where firms participate in a non-tournament R&D competition. We conclude that merger policy should be, in general, less restrictive in high technology markets (pharmaceuticals and telecoms), because mergers reduce the wasteful duplication of R&D expenditures. However, merger policy should become more strict in (very) asymmetric market structures. In this case, competition provides incentives for R&D, but, at the same time, duplication is avoided.

We consider a dominant upstream firm selling an input to several downstream firms through observable, non-discriminatory two-part tariff contracts. Downstream firms can alternatively buy the input from a less efficient source of supply. In this setting, we analyze the relationship between the competitive effects of downstream mergers and the level of concentration at the upstream level. We show that a downstream merger leads to lower wholesale prices. This translates into lower final prices only when the upstream market is sufficiently concentrated. In this case, a downstream merger tends to be both procompetitive and profitable.

This paper generalizes the model of Salant et al. (1983; Quarterly Journal of Economics, Vol. 98, pp. 185–199) to a successive oligopoly model with product differentiation. Upstream firms produce differentiated goods, retailers compete in quantities, and supply contracts are linear. We show that if retailers buy from all producers, downstream mergers do not affect wholesale prices. Our result replicates that of Salant's, where mergers are not profitable unless the size of the merged firm exceeds 80 per cent of the industry. This result is robust to the type of competition.

In this paper we derive the optimal two-part tariff contract for the licensing of a cost-reducing innovation to a differentiated goods industry of a general size. We analyze the cases where the patentee is an independent laboratory or an incumbent firm. We show that, regardless of the number of firms, the degree of product differentiation and the type of patentee, the innovation is licensed to all firms. Moreover, we endogenize research and development (R&D) investment and obtain that an internal patentee invests more (less) in R&D when the technological opportunity is low (high), which is supported by an empirical test using data on R&D expenditures of Spanish manufacturing firms.

We analyze third degree price discrimination by an upstream monopolist to a continuum of heterogeneous downstream firms. The novelty of our approach is to recognize that customizing prices may be costly. As a consequence, partial price discrimination arises in equilibrium; in particular, we show that inefficient downstream firms receive personalized prices whereas efficient firms are charged a uniform price. The extreme cases of complete price discrimination and uniform price arise in our setting as particular cases, depending on the cost of customizing prices.