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The economic theory of quasi-exclusive territory

Daisuke Nikae and Takeshi Ikeda
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Daisuke Nikae: Osaka City University
Takeshi Ikeda: Osaka City University

Industrial Organization from University Library of Munich, Germany

Abstract: This paper introduces the economic theory of "quasi-exclusive territory". We consider vertical dealings with two upstream firms and four downstream firms that compete in two separate markets. Under quasi- exclusive territory, downstream firms are bound to pay additional charges when selling goods beyond their territorial areas. We find that with respect to the two-part tariffs comprising a marginal price and a fixed fee, quasi-exclusive territory is more beneficial for upstream firms and more harmful for consumers than conventional exclusive territory. Moreover, we note that quasi-exclusive territory is in practice in various vertical dealings and that its regulation is a difficult task.

Keywords: Exclusive territory; Quasi-exclusive territory; Vertical dealings; Two-part tariff (search for similar items in EconPapers)
JEL-codes: D43 L22 L42 R32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mic
Date: 2005-08-01
Note: Type of Document - pdf; pages: 12
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