The Manufacturers’ Choice of Brand Policy under Successive Duopoly
We propose a non-cooperative game in order to emphasize the srategic rationale in shaping the distribution system. Compared with the received literature, we let manufacturers select which retailer(s) will market their respective brand. This, together with retailers possibly being multi-product dealers, enlarges the set of distribution systems. Whether manufacturers employ two retailers rather than one reflects the tradeoff between two conflicting efects, there is an output incease but more competition is established. High levels of product differentiation and not too large brand asymmetry are enough to incentive manufacturers introduce intra-band competition. However, the well-known exclusive dealing system shows up for little product differentiation and low brand asymmetry. It is worth emphasizing that, if any type of exclusivity relationship ever occurs, it is the equiibrium outcome of a non-cooperative game in which neither manufacturers nor retailers may impose any vertical clauses.
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- Tommy Staahl Gabrielsen & Lars Sørgard, 1999.
"Exclusive versus Common Dealership,"
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"On intrabrand and interbrand competition: The strategic role of fees and royalties,"
European Economic Review,
Elsevier, vol. 46(1), pages 189-200, January.
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NBER Working Papers
5666, National Bureau of Economic Research, Inc.
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- Bernheim, B.D., 1992. "Exclusive Dealing," Harvard Institute of Economic Research Working Papers 1622, Harvard - Institute of Economic Research.
- Daniel P. O'Brien & Greg Shaffer, 1997. "Nonlinear Supply Contracts, Exclusive Dealing, and Equilibrium Market Foreclosure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(4), pages 755-785, December.
- Lin, Y Joseph, 1990. "The Dampening-of-Competition Effect of Exclusive Dealing," Journal of Industrial Economics, Wiley Blackwell, vol. 39(2), pages 209-23, December.
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