Vertical restraints and horizontal control
This article considers vertical restraints in a setting in which duopoly retailers each sell more than one manufactured good. Vertical restraints by a dominant manufacturer enable the firm to acquire horizontal control over a competitively supplied retail good. The equilibrium contracts produce symptoms that are consistent with a variety of observed retail practices, including slotting fees paid to retailers by competitive suppliers, loss leadership, and predatory accommodation with below-cost manufacturer pricing for the dominant brand(s). Applications are developed for supermarket retailing, where the manufacturer of a national brand seeks to control the retail pricing of a supermarket's private label, and for convenience stores, where a gasoline provider seeks to control the retail pricing of an in-store composite consumption good. Copyright (c) 2009, RAND.
Year of publication: |
2009
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Authors: | Innes, Robert ; Hamilton, Stephen F. |
Published in: |
RAND Journal of Economics. - RAND, ISSN 0741-6261. - Vol. 40.2009, 1, p. 120-143
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Publisher: |
RAND |
Saved in:
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