IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

The Effect Of Vertical Integration In The Quality Of Disposable Products

  • MARCOS SINGER

    ()

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

  • PATRICIO DONOSO

    ()

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

This paper studies a single-product distribution channel where a manufacturer produces goods, some of which are defective, and a retailer, detecting only a subset of the defective goods, passes the rest along to customers, who end up discarding them. Conjecturing the structure of the demand and cost functions that assume customers to have a decreasing marginal aversion to bad quality while both the supplier and the retailer make marginally increasing efforts to avoid bad quality, we deduce several implicit parameters, including quality cost, based on observable data, such as the share of the channel margin. Once all the parameters of the model are available, we analyze the result of vertical integration. We not only confirm the well-known fact that vertical integration improves the quality perceived by the customer, but also characterize the attitude of the supplier, who may or may not provide a better service, in terms of the sum and the difference of logarithms of the margins.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://eacc10.puc.cl/files/ABT/Contenidos/Vol-4-N2/1Singer%20Donoso.pdf
Download Restriction: no

Article provided by Escuela de Administracion. Pontificia Universidad Católica de Chile. in its journal ABANTE.

Volume (Year): 4 (2001)
Issue (Month): 2 ()
Pages: 133-155

as
in new window

Handle: RePEc:pch:abante:v:4:y:2001:i:2:p:133-155
Contact details of provider: Web page: http://eacc10.puc.cl/RePEc/pch/

More information through EDIRC

Order Information: Email:


References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Wei Shi Lim, 2001. "Producer-Supplier Contracts with Incomplete Information," Management Science, INFORMS, vol. 47(5), pages 709-715, May.
  2. Wilfred Amaldoss & Robert J. Meyer & Jagmohan S. Raju & Amnon Rapoport, 2000. "Collaborating to Compete," Marketing Science, INFORMS, vol. 19(2), pages 105-126, November.
  3. Reyniers, Diane J. & Tapiero, Charles S., 1995. "Contract design and the control of quality in a conflictual environment," European Journal of Operational Research, Elsevier, vol. 82(2), pages 373-382, April.
  4. Voros, Jozsef, 2002. "Product balancing under conditions of quality inflation, cost pressures and growth strategies," European Journal of Operational Research, Elsevier, vol. 141(1), pages 153-166, August.
  5. Vrinda Kadiyali & Pradeep Chintagunta & Naufel Vilcassim, 2000. "Manufacturer-Retailer Channel Interactions and Implications for Channel Power: An Empirical Investigation of Pricing in a Local Market," Marketing Science, INFORMS, vol. 19(2), pages 127-148, September.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pch:abante:v:4:y:2001:i:2:p:133-155. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gimena Pardo)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.