Endogenous choice of price or quantity contract and the implications of two-part-tariff in a vertical structure

Debasmita Basak and Leonard F.S. Wang

Economics Letters, 2016, vol. 138, issue C, 53-56

Abstract: We re-investigate the endogenous choice of price (Bertrand) and quantity (Cournot) contract in the presence of a vertically related upstream market for input. We find that choosing price contract is the dominant strategy for downstream firms when the two-part-tariff pricing contract is determined through centralised Nash bargaining. We further show that the level of social welfare is the same regardless of the mode of product market competition (i.e., Bertrand or Cournot).

Keywords: Bargaining; Bertrand; Cournot; Two-part tariffs; Vertical pricing; Welfare (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:138:y:2016:i:c:p:53-56

DOI: 10.1016/j.econlet.2015.11.026

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