It is believed that market power of the input supplier, charging a linear price, is detrimental for the consumers since it creates the double marginalisation problem. We show that this view may not be true if the final goods producers can adopt strategies to reduce rent extraction by the input...

Several developing countries impose high tariffs, directly or indirectly, on imports of manufactured goods such as vehicles and machinery. In many cases governments argue that they need such policies to protect domestic manufacturing industries from foreign competition while simultaneously...