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on Contract Theory and Applications |
| By: | Kiho Yoon |
| Abstract: | With a multilateral vertical contracting model of media markets, we examine upstream competition and contractual arrangements in content provision. We analyze the trade of content by the Nash bargaining solution and the downstream competition by the Hotelling location model. We characterize the equilibrium outcomes and the contractual arrangements for various vertical structures. We show that the possibility of exclusive contracts rises when the value of the premium content increases, the degree of horizontal differentiation in the downstream market decreases, the importance of advertising revenue decreases, and the relative bargaining power of upstream firm decreases. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.15063 |
| By: | Mohammad T. Hajiaghayi; Piotr Krysta; Mohammad Mahdavi; Suho Shin |
| Abstract: | We study the problem of delegated choice with inspection cost (DCIC), which is a variant of the delegated choice problem by Kleinberg and Kleinberg (EC'18) as well as an extension of the Pandora's box problem with nonobligatory inspection (PNOI) by Doval (JET'18). In our model, an agent may strategically misreport the proposed element's utility, unlike the standard delegated choice problem which assumes that the agent truthfully reports the utility for the proposed alternative. Thus, the principal needs to inspect the proposed element possibly along with other alternatives to maximize its own utility, given an exogenous cost of inspecting each element. Further, the delegation itself incurs a fixed cost, thus the principal can decide whether to delegate or not and inspect by herself. We show that DCIC indeed is a generalization of PNOI where the side information from a strategic agent is available at certain cost, implying its NP-hardness by Fu, Li, and Liu (STOC'23). We first consider a costless delegation setting in which the cost of delegation is free. We prove that the maximal mechanism over the pure delegation with a single inspection and an PNOI policy without delegation achieves a $3$-approximation for DCIC with costless delegation, which is further proven to be tight. These results hold even when the cost comes from an arbitrary monotone set function, and can be improved to a $2$-approximation if the cost of inspection is the same for every element. We extend these techniques by presenting a constant factor approximate mechanism for the general setting for rich class of instances. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.07162 |
| By: | Robert Clark; Jean-François Houde; Xinrong Zhu |
| Abstract: | Previous research highlights persistent differences in national brand market shares across regions, driven by geographic consumer preferences and early entry advantages (Bronnenberg et al. 2007, 2009). This study investigates the extent to which long-term vertical contracts can explain the observed geographic dispersion and persistence of national brand dominance. Using NielsenIQ data from the same product categories as Bronnenberg et al. (2007), we follow Abowd et al. (1999) to decompose the variance in brand shares into Brand × Retailer and Brand × Market effects. Results show that 50% of the variance is explained by retailer effects, compared to 20% by market effects. This suggests that some retailers use vertical contracts that favor a specific brand across all markets in which they compete, such as exclusive-dealing, slotting allowances, or category-captaincy contracts, and that these play a key role in sustaining national brand dominance documented in prior literature. By emphasizing how retailer-specific factors drive observed patterns, we complement demand-side explanations and shift attention to supply-side factors that could affect competition. |
| JEL: | L42 L81 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33906 |
| By: | D. Carlos Akkar |
| Abstract: | A seller offers an asset in a decentralised market. Buyers have private signals about their common value. I study whether the market becomes allocatively more efficient with (i) more buyers, (ii) better-informed buyers. Both increase the information available about buyers' common value, but also the adverse selection each buyer faces. With more buyers, trade surplus eventually increases and converges to the full-information upper bound if and only if the likelihood ratios of buyers' signals are unbounded from above. Otherwise, it eventually decreases and converges to the no-information lower bound. With better information about trades buyers would have accepted, trade surplus increases. With better information about trades they would have rejected, trade surplus decreases--unless adverse selection is irrelevant. For binary signals, a sharper characterisation emerges: stronger good news increase total surplus, but stronger bad news eventually decrease it. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.06848 |