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Measuring the welfare of intermediaries in vertical markets

Javier Donna, Pedro Pereira, Tiago Pires and Andre Trindade
Additional contact information
Tiago Pires: Deceased. University of North Carolina at Chapel Hill

No 77, Working Papers from Red Nacional de Investigadores en Economía (RedNIE)

Abstract: We empirically investigate the welfare of intermediaries in oligopolistic markets, where intermediaries offer additional services. We exploit the unique circumstance that, in our empirical setting, consumers can purchase from manufacturers or intermediaries. Wespecify an equilibrium model, and estimate it using product-level data. The demand includes consumers with costly search and channel-specific preferences. The supply includes two distribution channels. One features bargaining about wholesale pricesbetween manufacturers and intermediaries, and price competition among intermediaries. The other is vertically integrated. The model is used to simulate counterfactuals, where intermediaries do not offer additional services. We find that intermediaries increasewelfare.

Keywords: Intermediaries; vertical markets; search frictions; bargaining; outdoor advertising (search for similar items in EconPapers)
JEL-codes: D83 L42 L81 M37 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2021-06
New Economics Papers: this item is included in nep-com
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https://rednie.eco.unc.edu.ar/files/DT/77.pdf (application/pdf)

Related works:
Working Paper: Measuring the Welfare of Intermediaries in Vertical Markets (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:aoz:wpaper:77

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