Auctions vs. negotiations in vertically related markets

Emanuele Bacchiega, Olivier Bonroy and Emmanuel Petrakis

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: In a two-tier industry with bottleneck upstream and two downstream firms producing vertically differentiated goods, we identify conditions under which the upstream supplier chooses exclusive or non-exclusive negotiations, or an English auction to sell its essential input. Auctioning off a two-part tariff contract is optimal for the supplier when its bar- gaining power is low and the final goods are not too differentiated. Otherwise, the supplier enters into exclusive or non-exclusive negotiations with the downstream firm(s). Finally, in contrast to previous findings, an auction is never welfare superior to negotiations.

JEL-codes: D43 L13 L14 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta, nep-des, nep-mic and nep-reg
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Related works:
Journal Article: Auctions vs. negotiations in vertically related markets (2020)
Working Paper: Auctions vs. negotiations in vertically related markets (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp1145

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