An Analysis of Common Sales Agents

Anming Zhang

Canadian Journal of Economics, 1993, vol. 26, issue 1, 134-49

Abstract: This article presents an analysis of common sales agents based on their precommitment role when sellers are better informed about the products than potential buyers. The author shows that an exclusive channel can create a cost, owing to the inability of exclusive sellers to commit themselves to sales impartiality. Independent noncooperative firms may use common agents as a precommitment to sales impartiality. The author demonstrates that common sales agency can arise as an equilibrium outcome in the absen ce of cost savings, marketing advantages, or the Bernheim-Whinston collusion effect. The analysis shows that common agency of this type can be welfare improving.

Date: 1993
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