Equilibrium Vertical Foreclosure

We formulate a complete bu analytically simple, equilibrium model of vertical mergers to evaluate the logic of standard vertical foreclosure claims and the criticisms made of those claims. The model includes incentives of the integrated firm and unintegrated input suppliers to exclude rivals the potential counter-strategies of competitors to these foreclosure threats, and the potential hold-out problem. In the fully specified model, vertical foreclosure can emerge in equilibrium.