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The possibility to renegotiate the contracts and the equilibrium mode of competition in vertically related markets

Olga Rozanova ()
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Olga Rozanova: Toulouse School of Economics

Economics Bulletin, 2017, vol. 37, issue 3, 1573-1580

Abstract: The paper demonstrates that if to allow renegotiation of the contract terms, then the result on profits in Alipranti et al.(2014) may be reversed, that is downstream firms may earn more under Bertrand competition than under Cournot competition. Furthermore, in equilibrium each downstream firm chooses price as a strategic variable.

Keywords: two-part tariffs; mode of competition; contract renegotiation (search for similar items in EconPapers)
JEL-codes: L2 D4 (search for similar items in EconPapers)
Date: 2017-07-16
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