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Vertical Restraints and Horizontal Control

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  • Hamilton, Stephen F.
  • Innes, Robert

Abstract

This paper considers vertical restraints in a multi-market retail setting in which each retailer sells the complete line of manufactured goods. Vertical restraints by one manufacturer on the retailers of its product serve as an instrument to exert horizontal control over the retail price of a rival manufactured good. Applications are developed for supermarket retailing, where the manufacturer of a national brand sold at both supermarkets can employ vertical restraints to control the pricing of the retailer's competing private labels, and for the personal computer industry, where the manufacturer of an essential computer component can use vertical restraints to control the pricing of complementary components bundled with the essential component by original equipment manufacturers (OEMs).

Suggested Citation

  • Hamilton, Stephen F. & Innes, Robert, 2006. "Vertical Restraints and Horizontal Control," 2006 Annual meeting, July 23-26, Long Beach, CA 21424, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21424
    DOI: 10.22004/ag.econ.21424
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    Citations

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    Cited by:

    1. Rey, Patrick & Verge, T., 2016. "Secret contracting in multilateral relations," TSE Working Papers 16-744, Toulouse School of Economics (TSE), revised Dec 2020.
    2. Gabrielsen, Tommy Staahl & Johansen, Bjørn Olav, 2013. "Resale Price Maintenance And Up-Front Payments: Achieving Horizontal Control Under Seller And Buyer Power," Working Papers in Economics 02/13, University of Bergen, Department of Economics.
    3. Noriaki Matsushima & Akira Miyaoka, 2015. "The effects of resale-below-cost laws in the presence of a strategic manufacturer," Quantitative Marketing and Economics (QME), Springer, vol. 13(1), pages 59-91, March.
    4. Tommy Staahl Gabrielsen & Bjørn Olav Johansen, 2017. "Resale Price Maintenance with Secret Contracts and Retail Service Externalities," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 63-87, February.
    5. Hamilton, Stephen F. & Bontems, Philippe & Lepore, Jason, 2015. "Oligopoly intermediation, relative rivalry and market conduct," International Journal of Industrial Organization, Elsevier, vol. 40(C), pages 49-59.
    6. Dertwinkel-Kalt, Markus & Wey, Christian, 2023. "Resale price maintenance in a successive monopoly model," DICE Discussion Papers 395, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. Noriaki Matsushima & Akira Miyaoka, 2013. "Who benefits from resale-below-cost laws?," ISER Discussion Paper 0875, Institute of Social and Economic Research, Osaka University.
    8. Hamilton, Stephen & Innes, Robert, 2017. "Slotting allowances and retail product variety under oligopoly," Economics Letters, Elsevier, vol. 158(C), pages 34-36.
    9. MacDonald, James M. & Dong, Xiao & Fuglie, Keith O., 2023. "Concentration and Competition in U.S. Agribusiness," Economic Information Bulletin 337566, United States Department of Agriculture, Economic Research Service.
    10. Tommy Staahl Gabrielsen & Bjørn Olav Johansen & Teis Lunde Lømo, 2018. "Resale Price Maintenance In Two‐Sided Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 66(3), pages 570-609, September.
    11. Sheldon, Ian M., 2017. "The Competitiveness Of Agricultural Product And Input Markets: A Review And Synthesis Of Recent Research," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 49(1), pages 1-44, February.
    12. Henrik Vetter, 2017. "Pricing and market conduct in a vertical relationship," Journal of Economics, Springer, vol. 121(3), pages 239-253, July.

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    More about this item

    Keywords

    Marketing;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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