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Equilibrium Configurations of Distribution Channels in Bilaterally Oligopolistic Industries

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  • Igor Muraviev

    (CECO - Laboratoire d'économétrie de l'École polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique)

Abstract

The paper develops a model in which two manufacturers bid for representation by each of two available retailers who then choose noncooperatively which manufacturer's bid, if any, to accept. This framework allows for interlocking relationships : each manufacturer can employ both retailers and conversely each retailer can represent both manufacturers. In contrast to the extant literature, which does not provide a classificatory characterization of equilibria in such a setting, the present paper establishes necessary and sufficient conditions for every distribution configuration to arise in equilibrium. The analysis is performed for different cases, namely, when bids are fully contingent and completely unconstrained and when they are subject to various constraints. In each case the paper identifies the conditions under which the most efficient configuration can be implemented as an equilibrium.

Suggested Citation

  • Igor Muraviev, 2007. "Equilibrium Configurations of Distribution Channels in Bilaterally Oligopolistic Industries," Working Papers hal-00243078, HAL.
  • Handle: RePEc:hal:wpaper:hal-00243078
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00243078
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    References listed on IDEAS

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    10. Tommy Staahl Gabrielsen & Lars Sørgard, 1999. "Exclusive versus Common Dealership," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 353-366, October.
    11. 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.
    12. José J. Sempere Monerris & Rafael Moner Colonques & Amparo Urbano, 2001. "Equilibrium Distribution Systems Under Retailers' Strategic Behavior," Working Papers. Serie AD 2001-01, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    13. Paul Dobson & Michael Waterson, 1999. "Retailer power: recent developments and policy implications," Economic Policy, CEPR;CES;MSH, vol. 14(28), pages 133-164, April.
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