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| Barna Bakó |
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| ''Exclusive contracts with vertically differentiated products'' |
| ( 2012, Vol. 32 No.2 ) |
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| In this paper we develop a simple model to analyze the effects of exclusive contracts in vertically integrated markets where both the upstream and the downstream market are characterized as oligopolies and manufacturers produce vertically differentiated products. We find that firms prefer to deal exclusively with retailers. If the extent of consumers' heterogeneity is small, manufacturers offer exclusive contracts unilaterally. On the other hand, if consumers' valuations differ significantly both manufacturers engage in exclusive contracting.
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| Keywords: vertical differentiation, exclusive contracts, double marginalization
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JEL: D4 - Market Structure and Pricing: General
L1 - Market Structure, Firm Strategy, and Market Performance: General |
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| Manuscript Received : Nov 24 2011 | | Manuscript Accepted : Apr 29 2012 |
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