Contracting with Externalities

Concentration‐Based Merger Tests and Vertical Market Structure

“…The end result was an oligopolistic outcome across the industry despite the existence of market power in the upstream segment. This baseline result was subsequently demonstrated to be robust to alternative assumptions on competitive instruments (O'Brien andShaffer 1992), information (McAfee andSchwartz 1994;Segal 1999;Rey and Verge 2004), contracting instruments (McAfee and Schwartz 1994;Segal and Whinston 2003), contract timing (Gans 2007), bargaining power (de Fontenay and Gans 2005), and the presence of upstream competition (de Fontenay and Gans 2005).…”

“…Those negotiations could be simultaneous (Segal 1999;O'Brien and Shaffer 2005) or sequential with passive beliefs (McAfee and Schwartz 1994;de Fontenay and Gans 2005). Either approach leads to the same outcome with regard to input quantities traded: pairwise negotiations between firms over input supply terms will satisfy bilateral efficiency.…”

On the role of confidentiality and deadlines in bilateral negotiations

“…Our paper is also related to the literature on bilateral contracting with externalities, introduced by Segal (1999), and later generalized by Segal and Whinston (2003). With a random-proposer bargaining, our model combines some elements of Segal and Whinston's "offering game," in which all offers are made by the buyer, and their "bidding game," in which all offers are made by the sellers.…”

Opportunism and menus of two-part tariffs

“…1 See also Cremer andRiordan (1987), O'Brien andShaffer (1994), Alexander and Reiffen (1995), Segal (1999), Corts and Neher (2003), and Marx and Shaffer (2004). result, the proposed remedies (vertical integration, non-overlapping territories, resale price maintenance) are the same in the two cases.…”