nep-cta New Economics Papers
on Contract Theory and Applications
Issue of 2019‒03‒25
three papers chosen by
Guillem Roig
University of Melbourne

  1. Personalized Pricing and Brand Distribution By Jullien, Bruno; Reisinger, Markus; Rey, Patrick
  2. Contract Farming and Rural Transformation: Evidence from a Field Experiment in Benin By Aminou Arouna; Jeffrey D. Michler; Jourdain C. Lokossou
  3. The Asymmetric Regulation applied on Asset Evaluation for Network Utilities’ tenders: the italian liberalisation of gas distribution’ case. By Roberto Fazioli; Donato Lenza

  1. By: Jullien, Bruno; Reisinger, Markus; Rey, Patrick
    Abstract: This paper examines the effects of personalized pricing on brand distribution. We explore whether a brand manufacturer prefers to sell through its own retail outlet only (mono distribution) or through an independent retailer as well (dual distribution). Personalized pricing allows for higher rent extraction but also leads to more fierce intra-brand competition than does uniform pricing. Due to the latter effect, a brand manufacturer may prefer mono distribution even if the retailer broadens the demand of the manufacturer’s product. By contrast, with uniform pricing, selling through both channels is always optimal. This result holds for wholesale contracts consisting of two-part tariffs as well as for linear wholesale tariffs. We also show that the manufacturer may obtain its largest profit in a hybrid pricing regime, in which only the retailer charges personalized prices. Keywords: personalized pricing, distribution channels, dual distribution, vertical contracting, downstream competition.
    Keywords: personalized pricing; distribution channels; dual distribution; vertical contracting; downstream competition.
    Date: 2019–03
  2. By: Aminou Arouna; Jeffrey D. Michler; Jourdain C. Lokossou
    Abstract: In recent decades contract farming has emerged as a popular mechanism to encourage vertical coordination in developing country agriculture. The goal of such coordination is to better integrate smallholder farmers into the modern agricultural food system, fostering rural transformation. We use panel data from a randomized control trial to quantify the impact of different contract attributes on rural transformation and welfare of smallholder rice farmers in Benin. We vary the terms of contract, with some farmers being offered a contract that only guarantees a price, while other contracts add extension training or input loans. While all three types of contracts had positive and significant effects, we find that contracts which only included an agreement on price had nearly as large of an impact as did contracts with additional attributes. This suggests that once price uncertainty is resolved, farmers are able to address other constraints on their own.
    JEL: C93 L14 O13 Q12
    Date: 2019–03
  3. By: Roberto Fazioli; Donato Lenza
    Abstract: Since June 2011, the individual municipalities cannot independently process their public tenders for the award of the natural gas provision services. Such public tenders pertain to pre-defined areas (known as Ambito Territoriale Minimo – ATEM, in short), much larger than most municipalities. This paper discusses the negative effects of the regulation defining the ATEM (i.e. specially Asymmetric Regulation) as the unit of reference for the public tenders, highlighting, in particular, the issues and the damages caused to the municipalities. It then suggests a way forward (i) to address the financial issues that the regulation is causing to the municipalities and (ii) to overcome the current standstill which is profitable only for the incumbents currently managing the distribution network despite the expiration of their contracts.
    Keywords: Network Utilities Competition; Asymmetric Regulation; Asset evaluation; Access Prices Regulation; Network Charges; Contestability; Public Finance Effect
    Date: 2019–03–21

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