Exclusive contracts with vertically differentiated products

Bakó, Barna (2012) Exclusive contracts with vertically differentiated products. Economics Bulletin, 32 (2). pp. 1312-1319.

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In this paper we develop a simple model to analyze the effects of exclusive contracts in vertically integrated markets where both the upstream and the downstream market are characterized as oligopolies and manufacturers produce vertically differentiated products. We find that firms prefer to deal exclusively with retailers. If the extent of consumers' heterogeneity is small, manufacturers offer exclusive contracts unilaterally. On the other hand, if consumers' valuations differ significantly both manufacturers engage in exclusive contracting.

Item Type:Article
Uncontrolled Keywords:vertical differentiation, exclusive contracts, double marginalization, JEL codes: D4, L1
Subjects:Mathematics, Econometrics
ID Code:621
Deposited By: Judit Lukács
Deposited On:09 May 2012 11:39
Last Modified:03 Jul 2012 01:27

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