Loading...
Please wait, while we are loading the content...
Vertical Contracts Between Manufacturers and Retailers: An Empirical Analysis
| Content Provider | Semantic Scholar |
|---|---|
| Author | Villas-Boas, Sofia Berto |
| Copyright Year | 2003 |
| Abstract | This paper tests different models of vertical contracting between manufacturers and retailers in the supermarket industry. I estimate demand and use the estimates to compute price-cost margins for retailers and manufacturers under different supply models without observing wholesale prices. I then test which sets of margins seems to be compatible with the margins obtained from direct estimates of cost and select the best among the non-nested competing models. The models considered are: (1) a double marginalization pricing model; (2) a vertically integrated model; and (3) a variety of alternative (strategic) supply scenarios, allowing for collusion, non-linear pricing and strategic behavior with respect to private label products. Using data on yogurt sold at several stores in a large urban area of the United States, I find that wholesale prices are close to marginal cost and that retailers have pricing power in the vertical chain. This is consistent with non-linear pricing by the manufacturers or with high bargaining power of the retailers. JEL Classifications: L13, L81, C12, C33. |
| File Format | PDF HTM / HTML |
| DOI | 10.2139/ssrn.444321 |
| Alternate Webpage(s) | http://www.ftc.gov/be/seminardocs/vertcontracts.pdf |
| Alternate Webpage(s) | http://ist-socrates.berkeley.edu/~villas/vertical.pdf |
| Alternate Webpage(s) | https://doi.org/10.2139/ssrn.444321 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
