Two-part tariffs versus linear pricing between manufacturers and retailers: empirical tests on differentiated products markets

Céline Bonnet, Pierre Dubois and Michel Simioni

Economics Working Paper Archive (Toulouse) from French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse)

Abstract: We present a methodology allowing to introduce manufacturers and retailers vertical contracting in their pricing strategies on a differentiated product market. We consider in particular two types of non linear pricing relationships, one where resale price maintenance is used with two part tariffs contracts and one where no resale price maintenance is allowed in two part tariffs contracts. Our contribution allows to recover price-cost margins from estimates of demand parameters both under linear pricing models and two part tariffs. The methodology allows then to test between different hypothesis on the contracting and pricing relationships between manufacturers and retailers in the supermarket industry using exogenous variables supposed to shift the marginal costs of production and distritution. We apply empirically this method to study the market for retailing bottled water in France. Our empirical evidence shows that manufacturers and retailers use non linear pricing contracts and in particular two part tariffs contracts with resale price maintenance. At last, thanks to the estimation of our structural model, we present some simulations of counterfactual policy experiments like the change of ownership of some products between manufacturers. ...French Abstract : Dans cet article, les auteurs présentent une méthodologie permettant de modéliser des contrats dans les stratégies de fixation des prix des distributeurs et des producteurs sur un marché oû les produits sont différenciés. Notamment, ils considèrent deux types de contrats à tarifs binômes pour modéliser les relations verticales : avec ou sans prix de revente imposés par les producteurs. Ce papier permet de déterminer les marges prix coût à partir de paramètres estimés de la demande à la fois pour des modèles de double marginalisation et pour des modèles à tarifs binômes. Différentes hypothèses sur les relations entre producteurs et distributeurs sont alors testées en utilisant des variables exogènes supposées faire varier les coûts marginaux de production et de distribution. Les auteurs appliquent empiriquement cette méthode au marché de l'eau plate nature embouteillée en France. Les résultats empiriques montrent que les producteurs et les distributeurs utilisent des contrats à tarifs binômes avec prix de revente imposés. De plus, grâce aux estimations du modèle structurel, les auteurs simulent des changements de propriété des produits entre producteurs et distributeurs.

Keywords: VERTICAL CONTRACTS; TWO PART TARIFFS; MANUFACTURERS; RETAILERS; DOUBLE MARGINALIZATION; COLLUSION; COMPETITION; WATER; DIFFERENTIATED PRODUCTS; NON NESTED TESTS; CONTRAT; PRODUCTEUR; DISTRIBUTION; COUT MARGINAL; CONCURRENCE ECONOMIQUE; DIFFERENCIATION DES PRODUITS; PRIX; EAU MINERALE; MODELE (search for similar items in EconPapers)
JEL-codes: C12 C33 L13 L81 (search for similar items in EconPapers)
Pages: 46 p.
Date: 2006
New Economics Papers: this item is included in nep-agr, nep-com, nep-mic and nep-mkt
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Related works:
Working Paper: Two-Part Tariffs versus Linear Pricing Between Manufacturers and Retailers: Empirical Tests on Differentiated Products Markets (2006)
Working Paper: Two-Part Tariffs versus Linear Pricing Between Manufacturers and Retailers: Empirical Tests on Differentiated Products Markets (2006)
Working Paper: Two-Part Tariffs versus Linear Pricing between Manufacturers and Retailers: Empirical Tests on Differentiated Products Markets (2006)
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