Downstream competition and profits under different input price bargaining structures

Domenico Buccella and Luciano Fanti

Journal of Economics, 2022, vol. 136, issue 3, No 3, 268 pages

Abstract: Abstract In a vertically related duopoly with input price bargaining, this paper re-examines the downstream firms’ profitability under different market competition degrees. It is shown the rather counterintuitive result that downstream firms earn highest profits with semi-collusion, whose level depends on the upstream bargaining structures, the relative parties’ bargaining power, and the parameters measuring the degree of product differentiation in the downstream market. Concerning social welfare, the key result is that policymakers can tolerate some degree of collusion with decentralized bargaining structures; centralized structures advise for a more procompetitive policy.

Keywords: Decentralized/semi-coordinated bargaining; Right-to-manage; Conjectural variation model (search for similar items in EconPapers)
JEL-codes: D43 J51 L13 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Downstream competition and profits under different input price bargaining structures (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:136:y:2022:i:3:d:10.1007_s00712-021-00772-6

DOI: 10.1007/s00712-021-00772-6

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