199 research outputs found
The balance of power between producers and retailers : a differentiation model
This paper argues that the balance of power between producers and retailers depends on the relative degrees of differentiation at the two levels of the vertical structure. We propose an extension of Hotelling's model in which two producers, competing in prices with horizontally differentiated products, face two horizontally differentiated retailers also competing in prices. We study the setting of producers' and retailers' margins. We show that when retailers are more differentiated than producers, they dominate the relationship and their margin is higher than producers'.Vertical relationships, differentiation
Retail structure and product variety
Nous examinons l'impact de la structure horizontale et verticale d'un marchĂ© sur les incitations Ă l'innovation et sur la variĂ©tĂ© des produits. Nous considĂ©rons le marchĂ© d'un bien homogĂšne oĂč un producteur peut innover pour Ă©tendre sa gamme de produits en crĂ©ant un nouveau produit substitut. Le coĂ»t de lancement du nouveau produit est fixe, et rĂ©parti entre les activitĂ©s de production et de distribution. Nous montrons qu'une chaĂźne intĂ©grĂ©e verticalement offre une plus grande variĂ©tĂ© de produits qu'une chaĂźne de monopoles. Si le coĂ»t de lancement du nouveau produit est rĂ©parti Ă©quitablement entre les deux secteurs, ou supportĂ© essentiellement par l'amont, une concurrence imparfaite dans le secteur aval ne restaure que partiellement les incitations Ă innover de la structure verticale. En revanche, si ce coĂ»t est supportĂ© principalement par le secteur aval, la concurrence en aval peut amener plus d'innovation que dans une structure verticalement intĂ©grĂ©e.
Loss leaders banning laws as vertical restraints.
Cet article Ă©tudie un effet pervers inflationniste de l'interdiction de la revente Ă perte. Dans un modĂšle oĂč un producteur en monopole vend son produit par l'intermĂ©diaire de distributeurs diffĂ©renciĂ©s, nous montrons que l'interdiction de la revente Ă perte peut permettre au producteur de limiter la concurrence intra-marque et d'amĂ©liorer son profit en augmentant son prix de gros, rĂ©tribuant les distributeurs par le biais des marges arriĂšre. L'interdiction de la revente Ă perte transforme le prix de gros en prix-plancher, augmentant le prix de dĂ©tail et diminuant le surplus des consommateurs.Distribution;Relations verticales;Revente Ă perte;Marges arriĂšre
A note on horizontal mergers in vertically related industries
We analyze horizontal mergers in vertically related industries. In a successive Cournot oligopoly model, we first compare the profitability of mergers in the upstream and in the downstream sectors. We characterize conditions on the concavities of the input supply function and the final demand function such that, ceteris paribus, an upstream merger is more protable than a downstream merger. We then provide a simple comparison of the relative losses of firms in an industry induced by a merger in the other sector when the degrees of concavity of the upstream and downstream demand functions are constant. We finally discuss the various mechanisms in action under non-constant degrees of concavity.horizontal mergers, vertically related industries, incentives to merge, elasticities of demand, loss from merger
Vertical Integration, Innovation and Foreclosure
This paper studies the potential effects of vertical integration on downstream firms' incentives to innovate. Interacting efficiently with a supplier may require information exchanges, which raises the concern that sensitive information may be disclosed to rivals. This may be particularly harmful in case of innovative activities, as it increases the risk of imitation. We show that vertical integration exacerbates this threat of imitation, which de facto degrades the integrated supplier's ability to interact with unintegrated competitors. Vertical integration may thus lead to input foreclosure, thereby raising rivals' cost and limiting both upstream competition and downstream innovation. A similar concern of customer foreclosure arises in the case of downstream bottlenecks.Vertical Integration, Foreclosure, Innovation, Imitation, Firewall.
Inefficiencies in the sale of ideas: theory and empirics
The sale of ideas (e.g. through licensing) facilitates vertical specialization and the division of labor between research and development. This specialization can improve the overall efficiency of the innovative process. However, these gains depend on the timing of the sale: the buyer of an idea should assume development at the stage at which he has an efficiency advantage. We show that in an environment with asymmetric information about the value of the idea and where this asymmetry decreases as the product is developed, the seller of the idea may delay the sale to the more efficient firm, thus incurring higher development costs. We obtain a condition for the equilibrium timing of the sale and examine how factors such as the intensity of competition between potential buyers influence it. Empirical analysis of licensing contracts signed between firms in the pharmaceutical industry supports our theoretical predictions.Innovation, Licensing, Market structure, Bargaining, Pharmaceuticals, Biotechnology.
Loss leaders banning laws as vertical restraints.
International audienceThis paper explores the indirect inflationary mechanism allowed by loss leaders banning laws. In a model where a monopolist producer sells his product through vertically separated and differentiated retailers, we show that the ban of resale at a loss can be used strategically by the producer to increase his wholesale price and pay the retailers through negotiated listing fees, thus raising his profit. The ban turns wholesale prices into floor prices, thus increasing resale price and lessening consumers' welfare.Cet article Ă©tudie un effet pervers inflationniste de l'interdiction de la revente Ă perte. Dans un modĂšle oĂč un producteur en monopole vend son produit par l'intermĂ©diaire de distributeurs diffĂ©renciĂ©s, nous montrons que l'interdiction de la revente Ă perte peut permettre au producteur de limiter la concurrence intra-marque et d'amĂ©liorer son profit en augmentant son prix de gros, rĂ©tribuant les distributeurs par le biais des marges arriĂšre. L'interdiction de la revente Ă perte transforme le prix de gros en prix-plancher, augmentant le prix de dĂ©tail et diminuant le surplus des consommateurs
Anti-Competitive Effects of resale-Below-Cost Laws
International audienceWe show that resale-below-cost laws enable producers to impose industry-wide price-floors to retailers. This mechanism suppresses downstream competition but also and more surprisingly dampens upstream competition, leading to higher prices and lower welfare. Price-floor may be more profitable for producers than resale price maintenance contracts and, when a resale price maintenance restraint may have ambiguous effect on welfare, price-floors are always welfare damaging. Retailers' buyer power appears as a key for a price-floor to work out
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