The Manufacturers’ Choice of Brand Policy under Successive Duopoly
AbstractWe propose a non-cooperative game in order to emphasize the srategic rationale in shaping the distribution system. Compared with the received literature, we let manufacturers select which retailer(s) will market their respective brand. This, together with retailers possibly being multi-product dealers, enlarges the set of distribution systems. Whether manufacturers employ two retailers rather than one reflects the tradeoff between two conflicting efects, there is an output incease but more competition is established. High levels of product differentiation and not too large brand asymmetry are enough to incentive manufacturers introduce intra-band competition. However, the well-known exclusive dealing system shows up for little product differentiation and low brand asymmetry. It is worth emphasizing that, if any type of exclusivity relationship ever occurs, it is the equiibrium outcome of a non-cooperative game in which neither manufacturers nor retailers may impose any vertical clauses.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2002003.
Date of creation: 01 Jan 2002
Date of revision:
Brand Policy; Distribution Systems; Intra-band Competition;
Find related papers by JEL classification:
- L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
- L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
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