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Identification of Supply Models of Retailer and Manufacturer Oligopoly Pricing

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Author Info
Sofia Villas-Boas (University of California, Berkeley)
Rebecca Hellerstein (Federal Reserve Bank of New York)

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Abstract

This note outlines conditions under which we can identify a vertical supply model of multiple retailers' and manufacturers' oligopoly-pricing behavior. This is an important question particularly when the researcher believes, contrary to the traditional assumption followed in the empirical literature, that retailers may not be neutral pass-through intermediaries. We show that a data-set of an industry's product prices, quantities, and input prices over time is sufficient to identify the vertical model of retailers' and manufacturers' oligopoly-pricing behavior given nonlinear demand, for homogeneous-products industries, and given multi-product firms, for differentiated-products industries.

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Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number 993.

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Date of creation: 01 Oct 2004
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Handle: RePEc:cdl:agrebk:993

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Keywords: Identification; Vertical relationships; Oligopoly models of multiple manufacturers and retailers;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92. [Downloadable!] (restricted)
  2. Julie Holland Mortimer, 2002. "The Effects of Revenue-Sharing Contracts on Welfare in Vertically-Separated Markets: Evidence from the Video Rental Industry," Harvard Institute of Economic Research Working Papers 1964, Harvard - Institute of Economic Research. [Downloadable!]
  3. Rebecca Hellerstein, 2004. "Who bears the cost of a change in the exchange rate? The case of imported beer," Staff Reports 179, Federal Reserve Bank of New York. [Downloadable!]
  4. Nevo, Aviv, 1998. "Identification of the oligopoly solution concept in a differentiated-products industry," Economics Letters, Elsevier, vol. 59(3), pages 391-395, June. [Downloadable!] (restricted)
  5. Goldberg, Pinelopi Koujianou & Verboven, Frank, 2001. "The Evolution of Price Dispersion in the European Car Market," Review of Economic Studies, Blackwell Publishing, vol. 68(4), pages 811-48, October.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Rebecca Hellerstein, 2006. "A decomposition of the sources of incomplete cross-border transmission," Staff Reports 250, Federal Reserve Bank of New York. [Downloadable!]
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  2. Sofia Villas-Boas, 2008. "An Empirical Investigation of the Welfare Effects of Banning Wholesale Price Discrimination," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series 1017, Department of Agricultural & Resource Economics, UC Berkeley. [Downloadable!]
    Other versions:
  3. Carlos Arnade & Munisamy Gopinath & Daniel Pick, 2007. "Measuring the Degree of Retail Competition in U.S. Cheese Markets," Journal of Agricultural & Food Industrial Organization, Berkeley Electronic Press, vol. 5(1), pages 1151-1151. [Downloadable!] (restricted)
  4. Rebecca Hellerstein & Sofia Berto Villas-Boas, 2006. "Arm's-length transactions as a source of incomplete cross-border transmission: the case of autos," Staff Reports 251, Federal Reserve Bank of New York. [Downloadable!]
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  5. Pinelopi K. Goldberg & Rebecca Hellerstein, 2007. "A framework for identifying the sources of local currency price stability with an empirical application," Staff Reports 287, Federal Reserve Bank of New York. [Downloadable!]
    Other versions:
  6. BONNET, CéLine & DUBOIS, Pierre & VILLAS BOAS, Sofia B., 2009. "Empirical Evidence on the Role of Non Linear Wholesale Pricing and Vertical Restraints on Cost Pass-Through," IDEI Working Papers 565, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
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