Gonçalves, Ricardo2016-12-192016-12-192015GONÇALVES, Ricardo - Backward partial vertical integration through private placement. In 8th Annual Meeting of the Portuguese Economic Journal, Minho, Portugal, 4-5 July 2014. - In 8th Annual Meeting of the Portuguese Economic Journal Programme & Abstracts (published online) 25p. Available at: http://www3.eeg.uminho.pt/economia/nipe/PEJ2014/index_ficheiros/Page423.htmhttp://hdl.handle.net/10400.14/21094We analyse the market impact of a partial vertical integration whereby a subset of retail rms acquire, through a private placement operation, a non-controlling stake in the capital of an upstream rm, which supplies an essential input. In addition, we assume that this upstream rm can price discriminate between two groups of retail rms: the retail rms which (now) own a stake in its capital and all of their retail rivals. We nd that price discrimination is optimal and, compared to a vertical separation scenario, there is input foreclosure, a higher retail price and lower social welfare, which suggests that, from a competition policy viewpoint, such partial vertical integrations should be analysed with particular concern. However, conducting a private placement operation of the upstream rm s capital yields gains from trade and we are able to identify the optimal characteristics of such an operation.engPrivate placementPartial vertical integrationInput foreclosurePrice discriminationconference object