Vertical Restraints and Producers' Competition / Patrick Rey, Joseph E. Stiglitz.

Format:

Book

Author/Creator:

Rey, Patrick.

Contributor:

National Bureau of Economic Research.

Stiglitz, Joseph E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2601.

NBER working paper series no. w2601

Language:

English

Subjects (All):

Retail trade--Mathematical models.

Retail trade.

Competition--Mathematical models.

Competition.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1988.

Cambridge, Massachusetts : National Bureau of Economic Research, 1988.

Summary:

This paper examines the rationale for vertical restraints. It shows that there are important circumstances under which these restrictions have significant anti-competitive effects. The paper focuses on the consequences of exclusive territorial arrangements among the retailers of two products which are imperfect substitutes. Such arrangements are shown to increase consumer prices; under plausible conditions the increase in consumer prices is sufficiently large to more than offset the deleterious effects from "double marginalization" resulting from reduced competition among retailers. The imposition of exclusivity provisions is may be part of a Nash equilibrium among producers. These results hold whether there are or are not franchise fees.

Notes:

Print version record

May 1988.