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A Note on the Profit Distribution among a Manufacturer and its Retailers

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Author Info
Naoki Watanabe () (Hitotsubashi University)

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Abstract

Examining two polar forms of restricted franchise contract, Nariu (2004) studied the pricing behavior of manufacturers and retailers and the market outcomes. This note provides a concise justification for his assumptions on contractual restraints. Introducing some fixed amount that a manufacturer must invest to build up its production facility, we show that a bargaining solution to distribute the total net profit among a manufacturer and its exclusive retailers assigns zero franchise fee payment to any retailers, if the investment is not large.

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File URL: http://www.accessecon.com/pubs/EB/2005/Volume12/EB-05L10018A.pdf
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Publisher Info
Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 12 (2005)
Issue (Month): 16 ()
Pages: 1-6
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:12:y:2005:i:16:p:1-6

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Related research
Keywords: bargaining solution;

Find related papers by JEL classification:
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Naoki Watanabe & Shigeo Muto, 2008. "Stable profit sharing in a patent licensing game: general bargaining outcomes," International Journal of Game Theory, Springer, vol. 37(4), pages 505-523, December. [Downloadable!] (restricted)
  2. Yair Tauman & Naoki Watanabe, 2007. "The Shapley Value of a Patent Licensing Game: the Asymptotic Equivalence to Non-cooperative Results," Economic Theory, Springer, vol. 30(1), pages 135-149, January. [Downloadable!] (restricted)
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Statistics
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