Lease or sale: When a durable goods monopolist can choose supply chain's openness

Hiroshi Kitamura, Noriaki Matsushima and Misato Sato

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

Abstract: We construct a two-period model of the supply chain's openness in a durable goods market by introducing two marketing modes: leasing and selling. Given a marketing mode, at the beginning of the first period, an incumbent supplier and the downstream monopolist choose one of the trading modes: (i) a two-period exclusive supply chain or (ii) an open supply chain, allowing the downstream monopolist to trade with an efficient supplier in the second period. We show that the downstream monopolist always chooses the open supply chain in the leasing mode, although the exclusive supply chain is attainable in the selling mode if the incumbent supplier's efficiency is high. Moreover, when we allow the downstream monopolist to choose the marketing mode endogenously before the first period, it chooses the selling mode if the incumbent supplier's efficiency is low; otherwise, it chooses the leasing mode. Regardless of the chosen marketing mode, the open supply chain always occurs on the equilibrium path, implying that the recent advancement of ICT to enhance leasing may discourage choosing the exclusive supply chain.

Date: 2021-03
New Economics Papers: this item is included in nep-com, nep-ict and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2021/DP1127.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:1127

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 ().