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Restriction of selling capacity by a retailer

Author

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  • Ramon Fauli-Oller

    (University of Alicante)

Abstract

We consider two symmetric upstream firms producing independent goods that sell to consumers through a common retailer. The distinguishing feature of the retailer is that she has a selling capacity, in the sense, that there is an upper limit in the total units of the two goods she can sell. We obtain that the retailer has incentives to reduce her selling capacity in order to increase the pay-off she obtains in the vertical structure.

Suggested Citation

  • Ramon Fauli-Oller, 2017. "Restriction of selling capacity by a retailer," Economics Bulletin, AccessEcon, vol. 37(2), pages 1-85.
    • Handle: RePEc:ebl:ecbull:eb-17-00080
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    References listed on IDEAS

    as
    1. B. Douglas Bernheim & Michael D. Whinston, 1998. "Exclusive Dealing," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 64-103, February.
    2. Roman Inderst & Greg Shaffer, 2007. "Retail Mergers, Buyer Power and Product Variety," Economic Journal, Royal Economic Society, vol. 117(516), pages 45-67, January.
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    Keywords

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    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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