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Menu contracts and the division of profits in vertical relationships

Author

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  • Ulsaker, Simen A.

Abstract

The article considers the use of menu contracts in vertical relationships. By offering publicly observable menus of contracts, competing retailers (manufacturers) can capture the entire industry profit when dealing with a common manufacturer (retailer).

Suggested Citation

  • Ulsaker, Simen A., 2016. "Menu contracts and the division of profits in vertical relationships," Economics Letters, Elsevier, vol. 138(C), pages 72-74.
    • Handle: RePEc:eee:ecolet:v:138:y:2016:i:c:p:72-74
    DOI: 10.1016/j.econlet.2015.11.025
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    References listed on IDEAS

    as
    1. B. Douglas Bernheim & Michael D. Whinston, 1998. "Exclusive Dealing," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 64-103, February.
    2. Jeanine Miklós‐Thal & Patrick Rey & Thibaud Vergé, 2011. "Buyer Power And Intrabrand Coordination," Journal of the European Economic Association, European Economic Association, vol. 9(4), pages 721-741, August.
    3. Leslie M. Marx & Greg Shaffer, 2007. "Upfront payments and exclusion in downstream markets," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 823-843, September.
    4. Patrick Rey & Michael D. Whinston, 2013. "Does retailer power lead to exclusion?," RAND Journal of Economics, RAND Corporation, vol. 44(1), pages 75-81, March.
    5. Martimort David & Stole Lars, 2003. "Contractual Externalities and Common Agency Equilibria," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-40, July.
    6. Daniel P. O'Brien & Greg Shaffer, 1997. "Nonlinear Supply Contracts, Exclusive Dealing, and Equilibrium Market Foreclosure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(4), pages 755-785, December.
    7. Ilya Segal & Michael D. Whinston, 2003. "Robust Predictions for Bilateral Contracting with Externalities," Econometrica, Econometric Society, vol. 71(3), pages 757-791, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Vertical relationships; Menu contracts; Common agency;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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