Economic and environmental impacts of vertical and horizontal competition and integration

Cited 6 time in webofscience Cited 0 time in scopus
  • Hit : 131
  • Download : 0
We explore the economic and environmental impacts of market structures (competition or integration at vertical and horizontal levels). We consider a bilateral duopoly consisting of two manufacturers and two retailers in which each manufacturer offers a wholesale price contract to the respective retailer. The manufacturers decide on wholesale prices and abatement efforts concerning pollution emissions related to manufacturing processes, whereas the retailers compete in quantities in the consumer market. To understand the comprehensive effects of market structures on economic competitiveness and environmental sustainability, we examine a measure of eco-friendly social welfare, which is the ratio of social welfare and environmental pollution. Interestingly, we find that the market structures that have been believed to be more efficient are less efficient from a broader perspective: (1) double marginalization can generate higher eco-friendly social welfare, and (2) horizontal competition between firms can result in lower eco-friendly social welfare. Although vertical integration and horizontal competition yield greater social welfare by facilitating more production activities, these market structures often fail to induce sufficient abatement efforts to balance the polluting effect of the large volume, resulting in more significant environmental degradation. We also show that, despite the pollution-curbing effect, higher emission penalties can result in less eco-friendly social welfare. They can even curtail the abatement efforts of firms under particular circumstances. When products become more substitutable, the eco-friendly social welfare can decrease depending upon the market structure.
Issue Date
Article Type

NAVAL RESEARCH LOGISTICS, v.66, no.2, pp.133 - 153

Appears in Collection
MT-Journal Papers(저널논문)
Files in This Item
There are no files associated with this item.
This item is cited by other documents in WoS
⊙ Detail Information in WoSⓡ Click to see webofscience_button
⊙ Cited 6 items in WoS Click to see citing articles in records_button


  • mendeley


rss_1.0 rss_2.0 atom_1.0