Restrictions verticales et externalité intra-marque en matière d'effort promotionnel. Un test empirique sur données françaises

Magali Chaudey () and Muriel Fadairo

Revue d'économie politique, 2006, vol. 116, issue 6, 807-830

Abstract: Vertical restraints are defined as contractual provisions binding companies of the distribution chain: suppliers and distributors, or wholesalers and retailers. Concern over these vertical restraints is justified because of their significance in the present-day configuration of industrial relations where networks play a major role and where the methods of distribution are undergoing some particularly far-reaching changes. Contracts econometrics is an interesting way to study these agreements. It is useful to highlight the situations where the constraints can be justified by market failures, more precisely by a range of externalities within the producers-retailers relationships, as explained by the theory of incentives and the principal-agent paradigm. The paper reviews this theoretical framework and provides empirical evidence from French data. To assess the agency theory empirical relevance in analyzing vertical restraints, we focus here on the intra brand competition, thus on externalities that generate a potential free-riding problem between the retailers of the same network. The central goal for the producer confronting this problem is to homogenize his network of retailers. The theory shows that vertical constraints can be a reaction from this agency problem. The data for the current study were collected in the ?yearbook of independent retailers networks? published by the headquarters of the French ?Chambres de Commerce et d?Industrie?. The information included in the 2001 yearbook comes directly from the networks in a broad range of trade and service industries. Our sample consists of 439 networks sharing a brand name. Four standard contractual forms (licence, concession, franchise, commission-affiliation) correspond to this criterion. Each of these contracts is characterized by a particular set of vertical restraints, and there is a hierarchy among the four types of contracts in accordance with the degree of constraint imposed on the retailer. The general testable qualitative prediction from the theoretical framework is that the level of externalities between the retailers of the same network determines the organisational structure of the vertical relationship. More precisely, we assume here that the level of the potential horizontal externality determines the degree of coercion of the contract between the upstream unit (the producer) and the downstream units (the retailers) within a network sharing a brand name. Considering the impossibility of measuring this externality directly, we use three proxy variables. The results of the test ? using an ordered probit model ? are partly consistent with the agency argument.

Keywords: vertical restraints; contract econometrics; advertising externality; ordered probit (search for similar items in EconPapers)
Date: 2006
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Related works:
Working Paper: Restrictions verticales et externalité intra-marque en matière d'effort promotionnel: un test empirique sur données françaises (2006)
Working Paper: Restrictions verticales et externalité intra-marque en matière d'effort promotionnel Un test empirique sur données françaises (2006)
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