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Consumer-benefiting exclusive territories

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  • Toshihiro Matsumura

Abstract

I investigate the effect of exclusive territories, which are typical vertical controls imposed by upstream firms. Using shipping spatial models, I consider an industry that consists of many independent local markets. An upstream monopolist restricts competition between downstream firms using exclusive territories. I find that exclusive territories reduce the prices of final products in all local markets in quantity-setting competition. In price-setting competition, they raise prices in half the local markets, reduce them in other markets, and also reduce the total consumer surplus.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 36 (2003)
Issue (Month): 4 (November)
Pages: 1007-1025

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Handle: RePEc:cje:issued:v:36:y:2003:i:4:p:1007-1025

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Cited by:
  1. Hiroaki Ino & Toshihiro Matsumura, 2010. "What role should public enterprises play in free-entry markets?," Journal of Economics, Springer, Springer, vol. 101(3), pages 213-230, November.
  2. Matsumura, Toshihiro & Shimizu, Daisuke, 2005. "Economic welfare in delivered pricing duopoly: Bertrand and Cournot," Economics Letters, Elsevier, Elsevier, vol. 89(1), pages 112-119, October.
  3. Colombo, Stefano, 2012. "An indifference result concerning collusion in spatial frameworks," Research in Economics, Elsevier, Elsevier, vol. 66(1), pages 18-21.
  4. Stefano Colombo, 2011. "Spatial price discrimination in the unidirectional Hotelling model with elastic demand," Journal of Economics, Springer, Springer, vol. 102(2), pages 157-169, March.
  5. repec:ebl:ecbull:v:4:y:2004:i:15:p:1-6 is not listed on IDEAS
  6. Matsushima, Noriaki & Matsumura, Toshihiro, 2006. "Mixed oligopoly, foreign firms, and location choice," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 36(6), pages 753-772, November.
  7. Takeshi Ikeda & Daisuke Nikae, 2006. "Exclusive territories in the presence of upstream competition," Economics Bulletin, AccessEcon, vol. 4(26), pages 1-6.
  8. Matsumura, Toshihiro & Shimizu, Daisuke, 2005. "Spatial Cournot competition and economic welfare: a note," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 35(6), pages 658-670, November.
  9. Toshihiro Matsumura & Noriaki Matsushima, 2012. "Spatial Cournot competition and transportation costs in a circular city," The Annals of Regional Science, Springer, Springer, vol. 48(1), pages 33-44, February.
  10. Stefano Colombo, 2014. "Fee versus royalty licensing in spatial Cournot competition," The Annals of Regional Science, Springer, Springer, vol. 52(3), pages 859-879, May.
  11. Colombo, Stefano, 2013. "Cartels in the unidirectional Hotelling model," Economic Modelling, Elsevier, Elsevier, vol. 31(C), pages 690-696.
  12. Stefano Colombo, 2012. "On optimal zoning in a linear town with Cournot competitors," Letters in Spatial and Resource Sciences, Springer, Springer, vol. 5(2), pages 113-118, July.
  13. Takeshi Ebina & Toshihiro Matsumura & Daisuke Shimizu, 2009. "Mixed oligopoly and spatial agglomeration in quasi-linear city," Economics Bulletin, AccessEcon, vol. 29(4), pages 2722-2729.
  14. Colombo, Stefano, 2011. "On the rationale of spatial discrimination with quantity-setting firms," Research in Economics, Elsevier, Elsevier, vol. 65(3), pages 254-258, September.

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