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Equilibrium Configurations of Distribution Channels in Bilaterally Oligopolistic Industries

  • Igor Muraviev

    (CECO - Laboratoire d'econometrie de l'école polytechnique - CNRS - Polytechnique - X)

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    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.

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    File URL: https://hal.archives-ouvertes.fr/hal-00243078/document
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    Paper provided by HAL in its series Working Papers with number hal-00243078.

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    Date of creation: 2007
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    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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    1. Øystein Foros & Hans Jarle Kind, 2008. "Do Slotting Allowances Harm Retail Competition?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 367-384, 06.
    2. Patrick Rey & Thibaud Verge, 2002. "Resale Price Maintenance and Horizontal Cartel," The Centre for Market and Public Organisation 02/047, Department of Economics, University of Bristol, UK.
    3. B. Douglas Bernheim & Michael D. Whinston, . "Exclusive Dealing," Working Papers 96008, Stanford University, Department of Economics.
    4. Besanko, David & Perry, Martin K., 1994. "Exclusive dealing in a spatial model of retail competition," International Journal of Industrial Organization, Elsevier, vol. 12(3), pages 297-329, September.
    5. Bonanno, Giacomo & Vickers, John, 1988. "Vertical Separation," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 257-65, March.
    6. Daniel P. O'Brien & Greg Shaffer, 1992. "Vertical Control with Bilateral Contracts," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 299-308, Autumn.
    7. Dobson, Paul W & Waterson, Michael, 1997. "Countervailing Power and Consumer Prices," Economic Journal, Royal Economic Society, vol. 107(441), pages 418-30, March.
    8. Tommy Staahl Gabrielsen & Lars Sørgard, 1999. "Exclusive versus Common Dealership," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 353-366, October.
    9. 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).
    10. Rafael Moner-Colonques & José J. Sempere-Monerris & Amparo Urbano, 2004. "The Manufacturers’ Choice of Distribution Policy under Successive Duopoly," Southern Economic Journal, Southern Economic Association, vol. 70(3), pages 532-548, January.
    11. Paul Dobson & Michael Waterson, 1999. "Retailer power: recent developments and policy implications," Economic Policy, CEPR;CES;MSH, vol. 14(28), pages 133-164, 04.
    12. 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.
    13. repec:ccp:journl:v:54:y:2003:i:1:p:111-125 is not listed on IDEAS
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