EQUILIBRIUM DISTRIBUTION SYSTEMS UNDER RETAILERS' STRATEGIC BEHAVIOR

José J. Sempere Monerris (), Rafael Moner Colonques () and Amparo Urbano
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José J. Sempere Monerris: Universitat de València
Rafael Moner Colonques: Universitat de València
Authors registered in the RePEc Author Service: José J. Sempere-Monerris

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: This paper investigates what are the equilibrium distribution systems in a successive duopoly when retailers hold the power to choose the number of products they wish to market. Since they both can be multi-product sellers, the number of possible channel structures considered is larger than in previous work. Then, we study whether the resulting distribution systems obtained in earlier papers still remain. In particular, whether there are incentives to adopt exclusive distribution agreements, whether a manufacturer is foreclosed from the market and, essentially, whether there exists, at equilibrium, enough inter and intra-brand competition. The analysis shows that provided low brand asymmetry, it is sufficient that retailers hold the power to choose the number of products they wish to distribute to obtain endogenously both inter and intra-brand competition; both retailers become multi-product sellers. However, as the profitability of brands diverges sufficiently, only the most profitable brand will be distributed by both retailers thus only arising intra-brand competition at equilibrium. Neither the exclusive distribution system nor a common distribution system analized in the previous literature appears at equilibrium.

Keywords: Distribution systems; retailer power. (search for similar items in EconPapers)
JEL-codes: L19 L42 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2001-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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