Market foreclosure

Market foreclosure is the exclusion that results when a downstream buyer is denied access to an upstream supplier (Upstream foreclosure) or when an upstream supplier is denied access to a downstream buyer. A supplier or intermediary in a supply chain can acquire this form of market power through mergers up and down its value chain (see vertical integration).

For example, in industries like gasoline refining, distribution and retail, it is possible to argue that a vertically-integrated refiner may reduce competition through practices that constrain supply to retailers outside of its network of related firms. Some researchers have suggested that US wholesale gasoline prices may be inflated by 0.2 to 0.6 cents per gallon because of market power wielded by the vertically integrated players in the industry.

(also known as vertical foreclosure)

(1) http://www.jstor.org/pss/2950611 (2) http://ideas.repec.org/p/soz/wpaper/0212.html