| Summary: | 碩士 === 國立中正大學 === 國際經濟研究所 === 93 === The study uses a successive duopoly model. We take final goods market into Bertrand competition and Cournot competitive separately, to analyze the vertical integration firm in which condition will divide into the upstream and downstream firms. And we also discusses the effect of the other upstream and downstream firms and social welfare.
We analyzes when final goods market is Bertrand competition first and we find the following important results: First, the vertical integration which will divide or not depends on the substitute between final goods. The more the substitute between final goods, the more possible the vertical integration divides. Second, if the vertical integration firm divides, the other upstream and downstream firms’ profits will increase and so will the industry total profits. Third, if the vertical integration firm divides, social welfare will decrease because the degree of consumer surplus decreasing is more than that of the industry total profits increasing. Than, we analyzes when final goods market is Cournot competition. We find the vertical integration firm will not divide whatever the substitute between final goods is. At this time, the other upstream and downstream firms and social welfare still maintain the level when the vertical integration firm does not divide.
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