Collusive Effects of a Monopolist's Use of an Intermediary to Deliver to Retailers

Isabel Teichmann and Vanessa von Schlippenbach

No 1440, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: A manufacturer contracting secretly with several downstream competitors faces an opportunism problem, preventing it from exerting its market power. In an infinitely repeated game, the opportunism problem can be relaxed. We show that the upstream firm's market power can be restored even further if the upstream firm chooses a mixed distribution system in which it makes use of an intermediary to distribute the good to a subset of the retailers and delivers directly only to the remaining downstream firms.

Keywords: Vertical relations; delegation; downstream monopolization; commitment problem; channel structure; multi-tier industry (search for similar items in EconPapers)
JEL-codes: L12 L14 L42 (search for similar items in EconPapers)
Pages: 33 p.
Date: 2014
New Economics Papers: this item is included in nep-com and nep-ind
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Related works:
Working Paper: Collusive effects of a monopolist's use of an intermediary to deliver to retailers (2015)
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