Consumer-benefiting exclusive territories

Toshihiro Matsumura

Canadian Journal of Economics, 2003, vol. 36, issue 4, 1007-1025

Abstract: I investigate the effect of exclusive territories, which are typical vertical controls imposed by upstream firms. Using shipping spatial models, I consider an industry that consists of many independent local markets. An upstream monopolist restricts competition between downstream firms using exclusive territories. I find that exclusive territories reduce the prices of final products in all local markets in quantity-setting competition. In price-setting competition, they raise prices in half the local markets, reduce them in other markets, and also reduce the total consumer surplus.

JEL-codes: L42 R32 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (34)

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