Abstract
We develop a general, tractable framework of multilateral vertical contracting, which places no restriction on tari§s and fully accounts for their impact on downstream competition. Equilibrium tariffs are cost-based and replicate the outcome of a multi-brand oligopoly, a finding in line with the analysis of a recent merger. We provide a micro-foundation for this framework, before analyzing the effect of RPM and price parity provisions, and of resale vs. agency business models. Finally, we extend the framework to endogenize the distribution network; we also consider mergers and show that their impact on the distribution network can dominate price effects
Keywords
Bilateral contracting; vertical relationships; agency; resale price maintenance; price parity clauses;
JEL codes
- D43: Oligopoly and Other Forms of Market Imperfection
- K21: Antitrust Law
- L13: Oligopoly and Other Imperfect Markets
- L42: Vertical Restraints • Resale Price Maintenance • Quantity Discounts
Reference
Patrick Rey, and T. Verge, “Secret contracting in multilateral relations”, TSE Working Paper, n. 16-744, December 2016, revised December 2020.
See also
Published in
TSE Working Paper, n. 16-744, December 2016, revised December 2020