Exclusive Dealing, Common Agency and Multiprincipals Incentive Theory
AbstractWhat are the costs and benefits of exclusive dealing and why do manufacturers choose to organize their retailing markets in this way instead of taking a common retailer? This article traces back the benefits of this organizational form of distribution to the provision of incentives in a setting of competing manufacturer-retailer hierarchies under adverse selection. It first develops a theoretical model that studies competition between hierarchies under the assumption of secret wholesale contracts. Second, it analyzes a game of choice of retailing channels between rival manufacturers. Depending on the extent of the adverse selection problem and on the complementarity or substitutability of their brands, manufacturers prefer to use either a common or an exclusive retailer.
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Bibliographic InfoPaper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 43.
Date of creation: 1994
Date of revision: 1996
Publication status: Published in The RAND Journal of Economics, vol.�27, n°1, 1996, p.�1-31.
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Other versions of this item:
- David Martimort, 1996. "Exclusive Dealing, Common Agency, and Multiprincipals Incentive Theory," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 1-19, Spring.
- Martimort, D., 1992. "Exclusive Dealing, Common Agency and Multiprincipals Incentive Thoery," Papers 92.278, Toulouse - GREMAQ.
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