"When Should Manufacturers Want Fair Trade?": New Insights from Asymmetric Information when Supply Chains Compete

Salvatore Piccolo, David Martimort, Jakub Kastl

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

5 Citazioni (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 and manufacturers might prefer different contractual modes if promotional externalities have substantial effects on demands.
Lingua originaleEnglish
pagine (da-a)649-677
Numero di pagine29
RivistaJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY
Stato di pubblicazionePubblicato - 2011
Pubblicato esternamente

Keywords

  • Resale Price Maintenance

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