Eichberger, Jürgen and Mueller-Langer, Frank (2012): On the Welfare Effects of Exclusive Distribution Arrangements.
Download (367kB) | Preview
The regulation of vertical relationships between firms is the subject of persistent legal and academic controversy. The literature studying vertical trade relationships seems to assume that an upstream monopolist prefers downstream competition over exclusive distribution arrangements. We derive precise conditions for when an upstream monopolist prefers competing distribution systems over exclusive distribution in the downstream market. We also show that the welfare effects of downstream competition are ambiguous. A downstream oligopoly may have negative welfare properties compared to a downstream monopoly.
|Item Type:||MPRA Paper|
|Original Title:||On the Welfare Effects of Exclusive Distribution Arrangements|
|Keywords:||Exclusive distribution; Competing distribution; Vertical foreclosure; Cournot competition|
|Subjects:||F - International Economics > F1 - Trade > F10 - General
L - Industrial Organization > L4 - Antitrust Issues and Policies > L42 - Vertical Restraints ; Resale Price Maintenance ; Quantity Discounts
D - Microeconomics > D4 - Market Structure, Pricing, and Design
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L12 - Monopoly ; Monopolization Strategies
|Depositing User:||Frank Müller-Langer|
|Date Deposited:||27 Jun 2012 14:54|
|Last Modified:||29 Apr 2016 06:40|
Baye,M.R., Crocker, K.J., Ju, J., 1996. Divisionalization, franchising, and divestiture incentives in oligopoly. American Economic Review. 86(1), 223-236.
de Fontenay, C.C., Gans, J.S., Groves, V., 2010. Exclusivity, competition and the irrelevance of internal investment. International Journal of Industrial Organization. 28(4), 336-340.
Durham, Y., 2000. An experimental examination of double marginalization and vertical relationships. Journal of Economic Behavior & Organization. 42(2), 207-229.
Ehrlich, E.M., Eisenach, J.A., Leighton, W.A., 2010. The impact of regulation on innovation and choice in wireless communications. Review of Network Economics. 9(1), Article 2.
Ganslandt, M., Maskus, K.E., 2007. Vertical distribution, parallel trade, and price divergence in integrated markets. European Economic Review. 51(4), 943-970.
Hastings, J.S., Gilbert, R.J., 2005. Market power, vertical integration and the wholesale price of gasoline. Journal of Industrial Economics. 53(4), 469-492.
Lutz, M., 2004. Pricing in segmented markets, arbitrage barriers, and the law of one price: evidence from the European car market. Review of International Economics. 12(3), 456-475.
Maskus, K.E., Chen, Y., 2004. Vertical price control and parallel imports: theory and evidence. Review of International Economics. 12(4), 551-570.
Polasky, S., 1992. Divide and conquer: on the profitability of forming independent rival divisions. Economics Letters. 40(3), 365-371.
Rey, P., Stiglitz, J., 1995. The role of exclusive territories in producers’ competition. RAND Journal of Economics. 26(3), 431-451.
Rey, P., Vergé, T., 2008. Economics of vertical restraints, in: Buccirossi, P. (Ed.), Handbook of Antitrust Economics. MIT Press, Cambridge, Massachusetts, pp. 353-390.
Richardson, M., 2004. Trade policy and access to retail distribution. Review of International Economics. 12(4), 676-688.
Saggi, K., Vettas, N., 2002. On intrabrand and interbrand competition: The strategic role of fees and royalties. European Economic Review. 46(1), 189-200.
Spiegel, Y., Yehezkel, Y., 2003. Price and non-price restraints when retailers are vertically differentiated. International Journal of Industrial Organization. 21(7), 923-947.