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Competition policy, parity regulation and self‐sabotage

David E.M. Sappington (Lanzellotti‐Mckethon Eminent Scholar at the University of Florida, Warrington College of Business, Gainesville, Florida, USA)
Dennis L. Weisman (Lanzellotti‐Mckethon Eminent Scholar at the University of Florida, Warrington College of Business, Gainesville, Florida, USA)

info

ISSN: 1463-6697

Article publication date: 1 February 2004

391

Abstract

This article analyzes the incentives for a vertically‐integrated producer (VIP) to engage in “self‐sabotage”. Self‐sabotage occurs when a VIP intentionally increases its upstream costs of production. This article explains why self‐sabotage may be profitable for a VIP even though it raises symmetrically the cost of the upstream product to all downstream producers. Identifies conditions under which self‐sabotage enables a VIP to disadvantage downstream rivals differentially without violating parity requirements.

Keywords

Citation

Sappington, D.E.M. and Weisman, D.L. (2004), "Competition policy, parity regulation and self‐sabotage", info, Vol. 6 No. 1, pp. 52-56. https://doi.org/10.1108/14636690410535926

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited

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