LUMP-SUM QUOTA BONUSES AND OTHER VERTICAL RESTRAINTS WITH COURNOT RETAILERS

Chris Y. Tung and Chun-chieh Wang

Global Journal of Business Research, 2013, vol. 7, issue 3, 75-88

Abstract: Lump-sum quota bonuses are a specific type of quota bonus that provides a lump-sum transfer from a manufacturer to a retailer when the retailer’s sales exceed a pre- determined quota. This paper explores whether lump-sum quota bonuses and two other vertical restraints, two-part tariffs and resale price maintenance, can resolve the double marginalization problem when the market size is uncertain. It emerges that only lump-sum quota bonuses can always resolve the double marginalization problem in our two-state case.

Keywords: Vertical Restraints; Lump-Sum Quota Bonuses; Cournot Competition; Uncertain Market Size (search for similar items in EconPapers)
JEL-codes: D89 L13 L42 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ibf:gjbres:v:7:y:2013:i:3:p:75-88

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