Upstream market power and product line differentiation in retailing

Avenel, Eric; Caprice, Stéphane

doi:10.1016/j.ijindorg.2005.05.002

Cited by 38 publications

(38 citation statements)

References 9 publications

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“…The bargaining effect arises, for example, in Avenel and Caprice's (2006) model of contracting with downstream product differentiation, in Marx and Shaffer's (1999) model of sequential bargaining between two suppliers and a single retailer, and in Chen and Riordan's (2004) model of the strategic interplay between vertical integration and exclusive dealing. None of these papers consider the question of a ban on price discrimination that is the focus of my paper.…”

Section: Introductionmentioning

confidence: 99%

Multilateral Vertical Contracting with an Alternative Supply: The Welfare Effects of a Ban on Price Discrimination

Caprice¹

2006

Rev Ind Organ

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Rey and Tirole [Handbook of Industrial Organization. Amsterdam: Elsevier (2005)] considered a model in which a monopolist sells to downstream firms using nonlinear contracts. They showed that banning price discrimination fully restores the supplier’s ability to leverage its monopoly power by enabling it to commit not to offer side discounts. I show that the situation changes when the supplier competes against a fringe of less efficient rivals rather than being a monopolist. Then banning price discrimination may cause per-unit prices to fall and welfare to increase. The dominant supplier can take advantage of a strategic bargaining effect: reducing the per-unit price makes the outside option of buying from the fringe less profitable, allowing the dominant supplier to extract more bargaining surplus through the fixed fee. Copyright Springer 2006bargaining effect, bilateral oligopoly, price discrimination, vertical contracting, K21, L13, L42,

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Section: Introductionmentioning

confidence: 99%

Multilateral Vertical Contracting with an Alternative Supply: The Welfare Effects of a Ban on Price Discrimination

Caprice¹

2006

Rev Ind Organ

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“…The choice of firms in duopoly adopting a labeled product line also relates to product line rivalry (e.g. Avenel and Caprice, 2006). Cheng and Peng (2012) show the importance of strategic effects in quality setting when a firm can offer more than one vertically differentiated product.…”

Section: Related Literaturementioning

confidence: 99%

Competition between For-Profit and Industry Labels: The Case of Social Labels in the Coffee Market

Baake

Naegele

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Competition between for-profit and industry labelsThe case of social labels in the coffee market * Pio Baake † Helene Naegele ‡ September 19, 2017 AbstractWe model strategic interaction on a market where two labeling organizations compete and firms in duopoly decide which labels to offer. The incumbent label maximizes its own profit, and is challenged by an industry standard which maximizes industry profit. Using a nested logit, the result of this multi-stage game depends crucially on the degree of horizontal differentiation. Joint firm profit always increases with the introduction of the industry standard. The industry standard wants to segment the market and strategically distorts its label quality downwards, such that each firm specializes in a different label. Social welfare however increases with the number of labeled products. A policy imposing a minimum label quality is only binding in the case of strategic quality distortion by the industry standard.JEL classification: L15, D43, L13

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“…In this case, the two firms' quality levels are s 1 = γ and s 2 = 1, respectively. Using the approach provided by Motta [20], Avenel and Caprice [21], and Li and Song [14], the inverse demand functions of the two firms are:…”

Section: Pre-licensing Equilibriummentioning

confidence: 99%

Environmental Standard, Quality Improvement, and Technology Transfer

Chang¹,

Pan

2014

TOENVIRJ

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With technology licensing on quality innovation becoming a general phenomenon in the industry, this study focuses on the impact of quality improvement under different environmental standards. We established a three-country model to analyze the actions taken by the domestic firm located in the home country with high quality technology, the foreign firm located in the foreign country with low quality technology, and the products they export to the third country. The importing country also decides on an environmental standard for reducing environmental pollution. Our major findings are: (1) A less strict environmental standard is preferable for the third country government in the beginning, but the government will become stricter with the increasing substitution of products in the long term. (2) In the aspect of licensing, the higher quality firm tends to provide an option to draw up a royalty licensing contract rather than a fixed-fee licensing contract. (3) The social welfare of the high quality firm is always higher than that of the low quality firm, but it will decrease with the increasing substitution of products. Coming from the increasing substitution of products, the excess profit that is created for the low quality firm is used as a cost for pollution abatement. Therefore, the social welfare of the foreign country does not change when the substitution of product changes. This model fully illustrates the real case of mainland China and enriches the field of technology licensing on quality innovation.JEL Codes: L11, L51, O13.

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Upstream market power and product line differentiation in retailing

Cited by 38 publications

References 9 publications

Multilateral Vertical Contracting with an Alternative Supply: The Welfare Effects of a Ban on Price Discrimination

Multilateral Vertical Contracting with an Alternative Supply: The Welfare Effects of a Ban on Price Discrimination

Competition between For-Profit and Industry Labels: The Case of Social Labels in the Coffee Market

Environmental Standard, Quality Improvement, and Technology Transfer

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