The authors thank the two anonymous JMR reviewers, whose thoughtful suggestions greatly improved the article. Rakesh Niraj also provided useful comments, and the authors are grateful to Emmanuel Patrakis and Steven Shugan for their insightful suggestions.

While retailers have sales data to forecast demand, manufacturers have a broad understanding of the market and the coming trends. It is well known that pooling such demand information within a distribution channel improves supply chain logistics. However, little is known about how information-sharing affects wholesale pricing incentives. In this paper, we investigate a channel structure where a manufacturer and two retailers have private signals of the state of the demand. Our model identifies the presence of a pricing distortion, which we term the , when a manufacturer sets price to an uninformed retailer. Because of this inference effect, the manufacturer would like to set a low wholesale price to signal to the retailer that the demand is low. On the other hand, the manufacturer would like to set a high wholesale price so that he earns the optimal margin on each unit sold. Vertical information sharing benefits the manufacturer by eliminating the distortion caused by the inference effect, which is more profound in a channel whose retailer has a noisier signal. This result implies that when there is a cost associated with transmitting information, the manufacturer may choose to share information with only the less-informed retailer rather than with both.channels of distribution, information sharing, retailing, game theory

The growing dominance of large retailers has altered traditional channel incentives for manufacturers. In this paper, we present a theoretical model to illustrate a strategic manufacturer response to a dominant retailer. In our model, a dominant and a weak retailer compete for the sale of a single product supplied by a single manufacturer. The dominant retailer has the power to dictate the wholesale price, but the manufacturer sets the wholesale price for the weak retailer. The manufacturer also has partial ability to transfer demand between retailers. In the strategic manufacturer response, the manufacturer begins by raising the wholesale price for the weak retailer over that for the dominant retailer. This makes the weak retailer the high-margin channel. The manufacturer then transfers demand to the weak retailer by engaging in joint promotions and advertising. We then use this strategic response model to derive a testable hypothesis that may guide future research in determining the source of dominant retailers' low prices.channels of distribution, channel power, retailing, game theory

Exclusive advertising on a given media outlet is usually profitable for an advertiser because consumers are less aware of competing products. However, for such arrangements to exist, media must benefit as well. We examine conditions under which such exclusive advertising contracts benefit both advertisers and media outlets (referred to as ) by illustrating that exclusive equilibria arise in a theoretical model of the media, advertisers, and consumers who participate in both the product and media markets. In the model, stations sell advertising space to advertisers and broadcast advertising messages to consumers. Conditions leading to higher equilibrium levels of advertising can be unprofitable for advertisers because high levels of advertising make consumers better informed and thus lead to fiercer product price competition. As a result, media stations may be less profitable as well because their payoff is determined as a fraction of the advertiser surplus generated in the product market. Stations mitigate this effect by offering advertisers exclusive advertising contracts. With such contracts, consumers are less informed about competing products, yielding higher producer surplus. It is profitable for stations to offer exclusivity when commercial advertising is an important means for advertisers to inform consumers about their products.Advertising, Market Structure, Media

A model is developed in which producers in a differentiated product market compete in prices and informative advertising. The model also includes commercial media, which are linked to producers through the advertising market and to consumers through the media market. We investigate how certain market parameters, such as media market differentiation or product market differentiation, affect the competitive level advertising chosen in the market. The model shows that less product differentiation or more media differentiation leads to a higher market level of advertising. In the case of sufficiently high media differentiation, levels of advertising are in excess of the social optimum.