The Balance of Power Between Producers and Retailers : A Differentiation Model
AbstractThis paper argues that the balance of power between producers and retailers depends on the relative degrees of differentiation at the two levels of the vertical structure. We propose an extension of Hotelling's model in which two producers, competing in prices with horizontally differentiated products, face two horizontally differentiated retailers also competing in prices. We study the setting of producers' and retailers' margins. We show that when retailers are more differentiated than producers, they dominate the relationship and their margin is higher than producers'.
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Bibliographic InfoPaper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 99-17.
Date of creation: 1999
Date of revision:
Other versions of this item:
- Marie-Laure Allain, 2002. "The Balance of Power between Producers and Retailers ; a Differentiation model," Recherches économiques de Louvain, De Boeck Université, vol. 68(3), pages 359-370.
- Marie-Laure ALLAIN, 2002. "The balance of power between producers and retailers : a differentiation model," Discussion Papers (REL - Recherches Economiques de Louvain) 2002034, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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