Vertical Contracting with Informational Opportunism

Vianney Dequiedt () and David Martimort

American Economic Review, 2015, vol. 105, issue 7, 2141-82

Abstract: We consider vertical contracting arrangements between a manufacturer and a retailing network when retailers have private information and the organization is run through bilateral contracts. We highlight a new form of informational opportunism arising when the manufacturer manipulates information learned separately in each relationship. We characterize the set of allocations robust to such opportunism by means of simple ex post incentive compatibility constraints. Those constraints limit the manufacturer's ability to use yardstick competition among retailers. They simplify contracts and restore a rent/efficiency trade-off even with correlated information. We show that sell-out contracts are optimal under a wide range of circumstances. (JEL D21, D86, L14, L60, L81)

JEL-codes: D21 D86 L14 L60 L81 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.20121640
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.20121640 (application/pdf)
https://www.aeaweb.org/aer/ds/10507/20121640_ds.zip (application/zip)
https://www.aeaweb.org/aer/app/10507/20121640_app.pdf (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Vertical Contracting with Informational Opportunism (2015)
Working Paper: Vertical Contracting with Informational Opportunism (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:105:y:2015:i:7:p:2141-82

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().