Supplier encroachment and retailer effort

Noriaki Matsushima and Tomomichi Mizuno

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: We propose simple dual-channel models in which an upstream manufacturer trades with a downstream retailer that is able to engage in cost-reducing activities. When the manufacturer determines whether to encroach on the downstream market after observing the retailer's effort level, the threat of manufacturer encroachment can work as a disciplinary device to induce the retailer to aggressively engage in cost reductions, after which the manufacturer refrains from encroaching further on the downstream market. The disciplinary device is more likely to improve consumer welfare and social welfare, although the encroachment itself can harm social welfare.

Date: 2018-03
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2018/DP1027.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1027

Access Statistics for this paper

More papers in ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka Contact information at EDIRC.
Bibliographic data for series maintained by Librarian (library@iser.osaka-u.ac.jp).