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Dual Distribution and Differentiated Products

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  • Philippe Cyrenne

Abstract

This paper develops an approach to analyzing the equilibrium in markets where firms selling differentiated products can choose dual distribution to sell their products. Dual distribution involves a firm selling its product both through company owned stores and through independently operated franchises. In choosing the proportion of company owned versus franchise stores, in equilibrium, the firms have no incentive to alter this ratio given the proportions chosen by rival firms. The approach taken here in analyzing dual distribution is quite general and can be applied in a variety of settings.

Suggested Citation

  • Philippe Cyrenne, 2011. "Dual Distribution and Differentiated Products," Departmental Working Papers 2011-04, The University of Winnipeg, Department of Economics.
  • Handle: RePEc:win:winwop:2011-04
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    File URL: http://economics.uwinnipeg.ca/RePEc/winwop/2011-04.pdf
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    References listed on IDEAS

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    1. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919, July.
    2. Gallini, Nancy T & Lutz, Nancy A, 1992. "Dual Distribution and Royalty Fees in Franchising," Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(3), pages 471-501, October.
    3. Mathewson, G Frank & Winter, Ralph A, 1985. "The Economics of Franchise Contracts," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 503-526, October.
    4. Minkler, Alanson P., 1990. "An empirical analysis of a firm's decision to franchise," Economics Letters, Elsevier, vol. 34(1), pages 77-82, September.
    5. Francine Lafontaine & Kathryn L. Shaw, 2005. "Targeting Managerial Control: Evidence from Franchising," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 131-150, Spring.
    6. Bonanno, Giacomo & Vickers, John, 1988. "Vertical Separation," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 257-265, March.
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