What question did this study set out to answer?

This research aims to investigate how partial vertical ownership influences the timing of moves between downstream firms in a vertically related market.

March 13, 2026

First Mover or Second Mover? Endogenous Timing With Partial Vertical Ownership

Puntos clave

This research aims to investigate how partial vertical ownership influences the timing of moves between downstream firms in a vertically related market.
Analyzed a vertically related market structure involving an upstream firm and two downstream firms.
Considered scenarios with partial vertical ownership but without control rights.
Examined competitive dynamics under Bertrand and Cournot settings.
Identified conditions under which downstream firms opt for simultaneous pricing or sequential production.
Showed that low product substitutability or high partial ownership encourages a more competitive strategy.
Reversed traditional understanding of move timing in vertically related markets.

Resumen

ABSTRACT We investigate a vertically related market with an upstream firm offering inputs to two downstream firms. Considering that downstream firms hold partial vertical ownership of the upstream firm without control rights, we analyze the endogenous order of moves for downstream firms and find that they may choose a more competitive situation: simultaneous pricing under Bertrand competition or sequential production under Cournot competition. Our results reverse the well‐known endogenous order of moves and occur when the degree of product substitutability is low or the degree of partial vertical ownership is high.

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