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Does Retailer Power Lead to Exclusion?

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  • Rey, Patrick
  • Whinston, Michael

Abstract

This paper examines whether retailer bargaining power and upfront slotting allowances prevent small manufacturers (who have no bargaining power) from obtaining adequate distribution. In contrast to the findings of Marx and Shaffer (2007), who showed that all equilibria involve limited distribution (i.e., exclusion of a retailer), we show that there is always an equilibrium in which full distribution is obtained, provided that full distribution is the industry profit-maximizing outcome. The key feature leading to this differing result is that we do not restrict each retailer to offering the manufacturer a single tariff.

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File URL: http://idei.fr/doc/wp/2011/retailerpreybis.pdf
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Bibliographic Info

Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 666.

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Date of creation: Feb 2011
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Publication status: Published in The RAND Journal of Economics, vol.�44, n°1, avril 2013, p.�75-81.
Handle: RePEc:ide:wpaper:24176

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  1. Martimort David & Stole Lars, 2003. "Contractual Externalities and Common Agency Equilibria," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-40, July.
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