Files
Abstract
We investigate differentiated product pricing and the effects of vertical organization under
imperfect competition. We rely on vertical measures of concentration (termed VHHI) to study
how the exercise of market power varies with substitution/complementarity relationships among
products and vertical structures. This approach is applied to U.S. soybean seed pricing under
vertical integration versus licensing. We find evidence that vertical organization affects seed
prices, with an impact ranging from 1.87% to 13.6% of the mean price. These effects vary by
institutional setup.We also find that complementarity can mitigate price enhancements associated
with market concentration.