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Product line choice in retail duopoly

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  • MONER_COLONQUES, Rafael
  • SEMPERE-MONERRIS, José J.
  • URBANo, Amparo

Abstract

This paper develops a successive duopoly model to identify conditions under which differentiated retailers that compete in quantities, when deciding on the range of brands to offer, will carry overlapping product lines. They will do so when retail margins on each brand are not too asymmetric. Otherwise, the less profitable brand is foreclosed from the market. It is shown that welfare increases if the upstream industry is perfectly competitive, even though fewer brands may be sold. With price competition though, exclusive dealing arises when retailers are not too differentiated and in‐store competition is sufficiently intense.
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Suggested Citation

  • MONER_COLONQUES, Rafael & SEMPERE-MONERRIS, José J. & URBANo, Amparo, 2011. "Product line choice in retail duopoly," LIDAM Reprints CORE 2428, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2428
    DOI: 10.1111/j.1530-9134.2011.00305.x
    Note: In : Journal of Economics & Management Strategy, 20(3), 777-802, 2011
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    References listed on IDEAS

    as
    1. Gilbert, Richard J & Matutes, Carmen, 1993. "Product Line Rivalry with Brand Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 41(3), pages 223-240, September.
    2. Avner Shaked & John Sutton, 1990. "Multiproduct Firms and Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 45-62, Spring.
    3. Tommy Staahl Gabrielsen & Lars Sørgard, 1999. "Discount Chains and Brand Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 127-142, March.
    4. Shaffer, Greg, 1991. "Capturing Strategic Rent: Full-Line Forcing, Brand Discounts, Aggregate Rebates, and Maximum Resale Price Maintenance," Journal of Industrial Economics, Wiley Blackwell, vol. 39(5), pages 557-575, September.
    5. Lin, Y Joseph, 1990. "The Dampening-of-Competition Effect of Exclusive Dealing," Journal of Industrial Economics, Wiley Blackwell, vol. 39(2), pages 209-223, December.
    6. De Fraja, Giovanni, 1993. "Relaxing spatial competition through product line choice (or vice versa)," Regional Science and Urban Economics, Elsevier, vol. 23(4), pages 461-486, September.
    7. Andreas Irmen, 1998. "Precommitment in Competing Vertical Chains," Journal of Economic Surveys, Wiley Blackwell, vol. 12(4), pages 333-359, September.
    8. Vrinda Kadiyali & Pradeep Chintagunta & Naufel Vilcassim, 2000. "Manufacturer-Retailer Channel Interactions and Implications for Channel Power: An Empirical Investigation of Pricing in a Local Market," Marketing Science, INFORMS, vol. 19(2), pages 127-148, September.
    9. O'Brien, Daniel P & Shaffer, Greg, 1993. "On the Dampening-of-Competition Effect of Exclusive Dealing," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 215-221, June.
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    Cited by:

    1. MANEZ, Juan A. & MONER-COLONQUES, Rafael & SEMPERE-MONERRIS, José J. & URBANO, Amparo, 2011. "Price differentials among brands in retail distribution: product quality and service quality," LIDAM Discussion Papers CORE 2011017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Kangsik Choi, 2022. "Delegation in multiproduct downstream firms with heterogeneous channels," Journal of Economics, Springer, vol. 135(1), pages 75-102, January.
    3. Cong Pan, 2016. "Retailer’s product line choice with manufacturer’s multichannel marketing," ISER Discussion Paper 0976, Institute of Social and Economic Research, Osaka University.
    4. Ramon Fauli‐Oller & Joel Sandonís, 2021. "Buyer power, product assortment and asymmetric retail formats," Bulletin of Economic Research, Wiley Blackwell, vol. 73(2), pages 196-211, April.
    5. Levent Kutlu & Alper Nakkas, 2018. "Strategic Product Line Choice under Asymmetric Demand Structure," The Japanese Economic Review, Japanese Economic Association, vol. 69(3), pages 347-359, September.
    6. Chrysovalantou Milliou & Joel Sandonis, 2018. "Manufacturer Mergers and Product Variety in Vertically Related Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 1-24, March.

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