Endogenous Contracts Under Bargaining in Competing Vertical Chains
Chrysovalantou Milliou (),
Emmanuel Petrakis () and
Nikolaos Vettas ()
No 3976, CEPR Discussion Papers from C.E.P.R. Discussion Papers
We investigate the endogenous determination of contracts in competing vertical chains where upstream and downstream firms bargain first over the type of contract and then over the contract terms. Upstream firms always opt for non-linear contracts, which specify the input quantity and its total price. Downstream firms also opt for non-linear contracts, unless their bargaining power is low, in which case they prefer wholesale price contracts. While welfare is maximized under two-part tariffs, these are dominated in equilibrium by non-linear contracts.
Keywords: bargaining; non-linear contracts; strategic contracting; two-part tariffs; vertical chains; wholesale prices (search for similar items in EconPapers)
JEL-codes: L13 L14 L22 L42 L81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at firstname.lastname@example.org
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:3976
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=3976
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().