On the Welfare Effects of Exclusive Distribution Arrangements

Jürgen Eichberger and Frank Mueller-Langer

MPRA Paper from University Library of Munich, Germany

Abstract: The regulation of vertical relationships between firms is the subject of persistent legal and academic controversy. The literature studying vertical trade relationships seems to assume that an upstream monopolist prefers downstream competition over exclusive distribution arrangements. We derive precise conditions for when an upstream monopolist prefers competing distribution systems over exclusive distribution in the downstream market. We also show that the welfare effects of downstream competition are ambiguous. A downstream oligopoly may have negative welfare properties compared to a downstream monopoly.

Keywords: Exclusive distribution; Competing distribution; Vertical foreclosure; Cournot competition (search for similar items in EconPapers)
JEL-codes: D4 F10 L12 L42 (search for similar items in EconPapers)
Date: 2012-05-24
New Economics Papers: this item is included in nep-bec and nep-com
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:39691

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