Vertical relations, opportunism, and welfare

Gaudin, Germain

doi:10.1111/1756-2171.12272

Cited by 33 publications

(34 citation statements)

References 33 publications

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“… Under linear contracts, interim observability prevents any opportunistic behaviour and leads to the same outcome as public contracts; see the related work by Gaudin (). …”

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confidence: 99%

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Vertical Bargaining and Retail Competition: What Drives Countervailing Power?

Gaudin

2017

The Economic 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. The working papers published in the Series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors' own opinions and do not necessarily reflect those of the editor. Terms of use: Documents in

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“… Under linear contracts, interim observability prevents any opportunistic behaviour and leads to the same outcome as public contracts; see the related work by Gaudin (). …”

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confidence: 99%

“…Under linear contracts, interim observability prevents any opportunistic behaviour and leads to the same outcome as public contracts; see the related work byGaudin (2016).© 2017 Royal Economic Society. 2018] W H A T D R I V E S C O U N T E R V A I L I N G P O W E R ?…”

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confidence: 99%

Vertical Bargaining and Retail Competition: What Drives Countervailing Power?

Gaudin

2017

The Economic Journal

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“…Instead, input prices at the margin equal the supplier's marginal cost. In contrast to the outcome under non-linear pricing, Gaudin (2019) shows consumer prices may be higher under secret than observable (and credible) linear input prices. Most of the papers on input price discrimination under non-linear contracts assume an unconstrained supplier.…”

Section: The Modelmentioning

confidence: 73%

“…Gilbert, 2015). Further examples are provided by Gaudin (2019). Iyer and Villas-Boas (2003) provide a theoretical rationale for using linear input pricing.…”

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confidence: 99%

Size-based Input Price Discrimination Under Endogenous Inside Options

et al. 2021

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Individual retailers may choose to invest in a substitute to a dominant supplier's products (inside option) as a way of improving its position towards the supplier. Given that a large retailer has stronger investment incentives than a smaller rival, the large retailer may obtain a selective rebate (size-based price discrimination). Yet, we often observe that suppliers do not price discriminate between retailers that differ in size. Why is this so? We argue that the explanation may be related to the competitive pressure among the retailers. The more fiercely the retailers compete, the more each retailer cares about its relative input prices. Other things equal, this implies that the retailers will invest more in the substitute the greater the competitive pressure. We show that if the competitive pressure is sufficiently strong, the supplier can profitably incentivize the retailer to reduce its investments in substitutes by committing to charge a uniform input price. Furthermore, we show that under uniform input pricing, the large retailer may induce smaller rivals to exit the market by strategically underinvesting in inside options.

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“…This need not always be the case under linear contracts: as shown by Gaudin [2019], wholesale and retail prices are lower under public contracts when retailers compete á la Bertrand. 9 The key driver of this result rests in the double marginalization problem being more severe under public contracts, when retailers' instruments are strategic complements.…”

Section: I(i) Related Literaturementioning

confidence: 99%

Vertical Contract Disclosure in Three‐Tier Industries*

Bisceglia

2023

The J Industrial Economics

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Consider a three‐tier industry with a monopolist supplying a manufacturer which sells its product to final consumers through two retailers. Contracts are linear and secret. Hence, upon receiving an out‐of‐equilibrium offer, each retailer must form a belief about the identity of the deviating upstream firm. This beliefs' specification problem wipes out if an Open Book Accounting (OBA) policy is implemented, whereby the input price is disclosed to retailers. Under Cournot (Bertrand) competition, OBA increases industry profits and consumer surplus if retailers believe that any out‐of‐equilibrium offer is more likely to reflect a deviation by the upstream supplier (by the manufacturer).

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Vertical relations, opportunism, and welfare

Cited by 33 publications

References 33 publications

Vertical Bargaining and Retail Competition: What Drives Countervailing Power?

Vertical Bargaining and Retail Competition: What Drives Countervailing Power?

Size-based Input Price Discrimination Under Endogenous Inside Options

Vertical Contract Disclosure in Three‐Tier Industries*

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