Citation

Discussion Paper Details

Please find the details for DP3976 in an easy to copy and paste format below:

Full Details

Title: Endogenous Contracts Under Bargaining in Competing Vertical Chains

Author(s): Chrysovalantou Milliou, Emmanuel Petrakis and Nikolaos Vettas

Publication Date: July 2003

Keyword(s): bargaining, non-linear contracts, strategic contracting, two-part tariffs, vertical chains and wholesale prices

Programme Area(s): Industrial Organization

Abstract: We investigate the endogenous determination of contracts in competing vertical chains where upstream and downstream firms bargain first over the type of contract and then over the contract terms. Upstream firms always opt for non-linear contracts, which specify the input quantity and its total price. Downstream firms also opt for non-linear contracts, unless their bargaining power is low, in which case they prefer wholesale price contracts. While welfare is maximized under two-part tariffs, these are dominated in equilibrium by non-linear contracts.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3976

Bibliographic Reference

Milliou, C, Petrakis, E and Vettas, N. 2003. 'Endogenous Contracts Under Bargaining in Competing Vertical Chains'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3976