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Measuring the welfare of intermediaries in vertical markets

Author

Listed:
  • Javier Donna

    (University of Florida)

  • Pedro Pereira

    (Autoridade da Concorrência)

  • Tiago Pires

    (Deceased. University of North Carolina at Chapel Hill)

  • Andre Trindade

    (FGV EPGE Brazilian School of Economics and Finance)

Abstract

We empirically investigate the welfare of intermediaries in oligopolistic markets, where intermediaries offer additional services. We exploit the unique circumstance that, in our empirical setting, consumers can purchase from manufacturers or intermediaries. Wespecify an equilibrium model, and estimate it using product-level data. The demand includes consumers with costly search and channel-specific preferences. The supply includes two distribution channels. One features bargaining about wholesale pricesbetween manufacturers and intermediaries, and price competition among intermediaries. The other is vertically integrated. The model is used to simulate counterfactuals, where intermediaries do not offer additional services. We find that intermediaries increasewelfare.

Suggested Citation

  • Javier Donna & Pedro Pereira & Tiago Pires & Andre Trindade, 2021. "Measuring the welfare of intermediaries in vertical markets," Working Papers 77, Red Nacional de Investigadores en Economía (RedNIE).
  • Handle: RePEc:aoz:wpaper:77
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    Cited by:

    1. Donna, Javier D. & Pereira, Pedro & Trindade, Andre & Yoshida, Renan C., 2020. "Direct-to-Consumer Sales by Manufacturers and Bargaining," MPRA Paper 105773, University Library of Munich, Germany.

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    More about this item

    Keywords

    Intermediaries; vertical markets; search frictions; bargaining; outdoor advertising;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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