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Secret contracting in multilateral relations

Patrick Rey () and Thibaud Vergé ()
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Thibaud Vergé: CREST; ENSAE

No 2017-44, Working Papers from Center for Research in Economics and Statistics

Abstract: We develop a general but tractable framework of multilateral vertical contracting between upstream and downstream ?firms, without any restriction on tariffs, and yet taking into account their impact on downstream competition. In equilibrium, tariffs are cost-based and replicate the outcome of a multi-brand oligopoly, a fi?nding in line with the analysis of a recent merger. To illustrate its versatility, we use this framework to analyze the effect of vertical restraints (resale price maintenance and retail price parity clauses) and of alternative business models (resale vs. agency). Finally, we extend the framework so as to endogenize the market structure.

Keywords: Bilateral contracting; vertical relationships; agency; resale price maintenance; price parity clauses (search for similar items in EconPapers)
JEL-codes: L13 L42 D43 K21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-law, nep-mic and nep-mkt
Date: 2017-07-17
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