(In)efficient trading forms in competing vertical chains
AbstractWe study competing vertical chains where upstream and downstream firms bargain over their form and terms of trading. Both (conditionally) inefficient wholesale price contracts and efficient contracts that take the form of price-quantity bundles (and not of two-tariffs) arise in equilibrium under different parameter configurations. Changes in bargaining power distribution affect market outcomes by altering the trading terms and, more importantly, the trading form. As a result, a firm might benefit by a reduction in its bargaining power and consumers could benefit from an increase in the downstream ÃƒÂ¢Ã¯Â¿Â½Ã¯Â¿Â½countervailing powerÃƒÂ¢Ã¯Â¿Â½Ã¯Â¿Â½ or from a more uneven bargaining power distribution.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0916.
Length: 48 pages
Date of creation: 08 Dec 2009
Date of revision:
Vertical chains; strategic contracting; bargaining; two-part tariffs; price-quantity bundles; wholesale prices; vertical integration;
Find related papers by JEL classification:
- L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- 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
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
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