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A Comparison of the Wholesale Model and the Agency Model in Differentiated Markets

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  • Liang Lu

    (University of East Anglia)

Abstract

We compare the wholesale model and the agency model that characterise a vertical relation in a bilateral duopoly framework. Results suggest that the agency model may be regarded as an example of retailer power resale price maintenance and provide an economic view of why restraints of this kind should be evaluated under the rule of reason. While competition is more likely to be undercut under the agency model, relative to the wholesale model, the agency model benefits consumers by offering relatively lower retail prices and greater demand.

Suggested Citation

  • Liang Lu, 2017. "A Comparison of the Wholesale Model and the Agency Model in Differentiated Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(2), pages 151-172, September.
    • Handle: RePEc:kap:revind:v:51:y:2017:i:2:d:10.1007_s11151-017-9583-y
    DOI: 10.1007/s11151-017-9583-y
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    References listed on IDEAS

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    Cited by:

    1. Kangsik Choi & Seonyoung Lim, 2022. "Comment on “A Comparison of the Wholesale Model and the Agency Model in Differentiated Markets”," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 61(3), pages 373-377, November.
    2. Maruyama, Masayoshi & Zennyo, Yusuke, 2020. "Platform most-favored-customer clauses and investment incentives," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    3. Chen, Xu & Wang, Xiaojun & Zhang, Dan & Yang, Mingfang, 2023. "Selling models for platforms under service-sensitive demand," Omega, Elsevier, vol. 115(C).
    4. Jeroen Hinloopen & Stephen Martin, 2017. "Introduction to the Special Issue," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(2), pages 147-149, September.
    5. Saruta, Fuyuki, 2023. "Private labels and platform competition," MPRA Paper 119585, University Library of Munich, Germany.

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    More about this item

    Keywords

    Agency model; Competition; Resale price maintenance; Retailer power; Vertical restraints;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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