Delegation, Ownership Concentration and R&D Spending: Evidence From Italy

David Martimort, Salvatore Piccolo, Jakub Kastl

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

We study a model of competing manufacturer/retailer pairs where adverse selection and moral hazard are coupled with promotional externalities at the downstream level. In contrast to earlier models mainly focusing on a bilateral monopoly setting, we show that with competing brands a 'laissez-faire' approach towards vertical price control might not always promote productive efficiency. Giving manufacturers freedom to control retail prices is more likely to harm consumers when retailers impose positive promotional externalities on each other, and the converse is true otherwise. Our simple model also suggests that, with competing supply chains, consumers andmanufacturersmight prefer different contractual modes if promotional externalities have substantial effects on demands.
Original languageEnglish
Pages (from-to)84-107
Number of pages24
JournalJournal of Industrial Economics
Volume61
DOIs
Publication statusPublished - 2013

Keywords

  • Delegation
  • R&D

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