The Manufacturers’ Choice of Brand Policy under Successive Duopoly

Rafael Moner-Colonques, José Sempere-Monerris and Amparo Urbano
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Rafael Moner-Colonques: University of Valencia

No 2002003, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We propose a non-cooperative game in order to emphasize the srategic rationale in shaping the distribution system. Compared with the received literature, we let manufacturers select which retailer(s) will market their respective brand. This, together with retailers possibly being multi-product dealers, enlarges the set of distribution systems. Whether manufacturers employ two retailers rather than one reflects the tradeoff between two conflicting efects, there is an output incease but more competition is established. High levels of product differentiation and not too large brand asymmetry are enough to incentive manufacturers introduce intra-band competition. However, the well-known exclusive dealing system shows up for little product differentiation and low brand asymmetry. It is worth emphasizing that, if any type of exclusivity relationship ever occurs, it is the equiibrium outcome of a non-cooperative game in which neither manufacturers nor retailers may impose any vertical clauses.

Keywords: Brand Policy; Distribution Systems; Intra-band Competition (search for similar items in EconPapers)
JEL-codes: L19 L42 (search for similar items in EconPapers)
Pages: 33
Date: 2002-01-01
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (2)

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