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on Contract Theory and Applications |
| By: | Jullien, Bruno; Reisinger, Markus; Rey, Patrick |
| Abstract: | This paper analyzes a supplier's incentives to foreclose downstream entry when entrants have stronger positions in different market segments, thus bringing added value as well as competition. We first consider the case where wholesale contracts take the form of linear tariffs, and characterize the conditions under which the competition-intensifying effect dominates, thereby leading to foreclosure. We then show that foreclosure can still occur with non-linear tari¤s, even coupled with additional provisions such as resale price maintenance. |
| Keywords: | Foreclosure; Vertical Contracting; Customer Segments; Downstream Competition |
| JEL: | D43 K21 L12 L42 |
| Date: | 2017–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32305&r=cta |
| By: | JOHNEN Johannes (CORE, Université catholique de Louvain) |
| Abstract: | Automatic contract renewals are a common feature in consumer markets and a frequent concern among policy makers. They can be used to exploit consumer inertia when consumers forgo benefits from switching to better alternatives. I consider two sources for th |
| Keywords: | Limited Attention, Automatic Contract Renewal, Price Discrimination, Present Bias, Naiveté |
| JEL: | D03 D18 D41 D42 D82 |
| Date: | 2017–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2017030&r=cta |
| By: | Ioannis N. Pinopoulos (Department of Economics, University of Macedonia) |
| Abstract: | We study the welfare effects of input price discrimination when an unconstrained upstream supplier uses linear contracts that are unobservable by downstream firms. With homogeneous final goods, we show that banning input price discrimination decreases welfare. This finding is in contrast to that in the existing literature that considers observable linear contracts. When final goods are sufficiently differentiated, it is shown that banning input price discrimination increases welfare. This result is in contrast to that in the existing literature that considers unobservable two-part tariff contracts.. |
| Keywords: | Input price discrimination; linear contracts; welfare. |
| JEL: | D43 L11 L42 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:mcd:mcddps:2018_01&r=cta |