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Consumer-benefiting exclusive territories

Author

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  • Toshihiro Matsumura

Abstract

I investigate the effect of exclusive territories, which are typical vertical controls imposed by upstream firms. Using shipping spatial models, I consider an industry that consists of many independent local markets. An upstream monopolist restricts competition between downstream firms using exclusive territories. I find that exclusive territories reduce the prices of final products in all local markets in quantity-setting competition. In price-setting competition, they raise prices in half the local markets, reduce them in other markets, and also reduce the total consumer surplus.

Suggested Citation

  • Toshihiro Matsumura, 2003. "Consumer-benefiting exclusive territories," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 1007-1025, November.
  • Handle: RePEc:cje:issued:v:36:y:2003:i:4:p:1007-1025
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    Citations

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    Cited by:

    1. Stefano Colombo, 2011. "Spatial price discrimination in the unidirectional Hotelling model with elastic demand," Journal of Economics, Springer, vol. 102(2), pages 157-169, March.
    2. Takeshi Ikeda & Daisuke Nikae, 2006. "Exclusive territories in the presence of upstream competition," Economics Bulletin, AccessEcon, vol. 4(26), pages 1-6.
    3. Minoru Kitahara & Toshihiro Matsumura, 2008. "Simultaneous Price Changes, Information Acquisition On Common Competitors And Welfare ," Australian Economic Papers, Wiley Blackwell, vol. 47(4), pages 389-395, December.
    4. Matsumura, Toshihiro & Shimizu, Daisuke, 2005. "Economic welfare in delivered pricing duopoly: Bertrand and Cournot," Economics Letters, Elsevier, vol. 89(1), pages 112-119, October.
    5. Stefano Colombo, 2014. "Fee versus royalty licensing in spatial Cournot competition," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(3), pages 859-879, May.
    6. Toshihiro Matsumura & Daisuke Shimizu, 2008. "A Noncooperative Shipping Cournot Duopoly With Linear-Quadratic Transport Costs And Circular Space," The Japanese Economic Review, Japanese Economic Association, vol. 59(4), pages 498-518.
    7. Kitamura, Hiroshi & Matsushima, Noriaki & Sato, Misato, 2018. "Exclusive contracts with complementary inputs," International Journal of Industrial Organization, Elsevier, vol. 56(C), pages 145-167.
    8. Colombo, Stefano, 2011. "On the rationale of spatial discrimination with quantity-setting firms," Research in Economics, Elsevier, vol. 65(3), pages 254-258, September.
    9. Hiroshi Kitamura & Noriaki Matsushima & Misato Sato, 2013. "How Does Downstream Firms' Efficiency Affect Exclusive Supply Agreements?," ISER Discussion Paper 0878r, Institute of Social and Economic Research, Osaka University, revised Sep 2015.
    10. Colombo, Stefano, 2013. "Cartels in the unidirectional Hotelling model," Economic Modelling, Elsevier, vol. 31(C), pages 690-696.
    11. Hiroaki Ino & Toshihiro Matsumura, 2010. "What role should public enterprises play in free-entry markets?," Journal of Economics, Springer, vol. 101(3), pages 213-230, November.
    12. Stefano Colombo, 2012. "On optimal zoning in a linear town with Cournot competitors," Letters in Spatial and Resource Sciences, Springer, vol. 5(2), pages 113-118, July.
    13. Matsumura, Toshihiro & Shimizu, Daisuke, 2005. "Spatial Cournot competition and economic welfare: a note," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 658-670, November.
    14. Matsushima, Noriaki & Matsumura, Toshihiro, 2006. "Mixed oligopoly, foreign firms, and location choice," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 753-772, November.
    15. Tomomichi Mizuno, 2009. "Divisionalization And Horizontal Mergers In A Vertical Relationship," Manchester School, University of Manchester, vol. 77(3), pages 317-336, June.
    16. Toshihiro Matsumura & Noriaki Matsushima, 2012. "Spatial Cournot competition and transportation costs in a circular city," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 33-44, February.
    17. Salvatore Piccolo & Markus Reisinger, 2011. "Exclusive Territories and Manufacturers' Collusion," Management Science, INFORMS, vol. 57(7), pages 1250-1266, July.
    18. Toshihiro Matsumura & Daisuke Shimizu, 2015. "Endogenous Flexibility In The Flexible Manufacturing System," Bulletin of Economic Research, Wiley Blackwell, vol. 67(1), pages 1-13, January.
    19. Takeshi Ebina & Toshihiro Matsumura & Daisuke Shimizu, 2009. "Mixed oligopoly and spatial agglomeration in quasi-linear city," Economics Bulletin, AccessEcon, vol. 29(4), pages 2722-2729.
    20. repec:dpr:wpaper:0918 is not listed on IDEAS
    21. Colombo, Stefano, 2012. "An indifference result concerning collusion in spatial frameworks," Research in Economics, Elsevier, vol. 66(1), pages 18-21.
    22. repec:ebl:ecbull:v:4:y:2004:i:15:p:1-6 is not listed on IDEAS

    More about this item

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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