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Models of vertical market relations

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  • Inderst, Roman

Abstract

I contrast various models of vertical contracting that view upstream interactions either through the lenses of bilateral contracting and negotiations or through the lenses of a "market interface" with uniform contractual terms. Existing models contrast starkly in their policy implications, in particular when imperfect horizontal competition, on either the upstream or the downstream level, interacts with differential buyer power. Depending on industry characteristics, different assumptions on contracting may be appropriate. Even though the quest for an all-encompassing modelling framework seems vain, existing models can still be made more flexible, so as to be of greater practical usage.

Suggested Citation

  • Inderst, Roman, 2010. "Models of vertical market relations," International Journal of Industrial Organization, Elsevier, vol. 28(4), pages 341-344, July.
    • Handle: RePEc:eee:indorg:v:28:y:2010:i:4:p:341-344
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    References listed on IDEAS

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    1. Roman Inderst & Tommaso M. Valletti, 2007. "Market Analysis In The Presence Of Indirect Constraints And Captive Sales," Journal of Competition Law and Economics, Oxford University Press, vol. 3(2), pages 203-231.
    2. Oliver Hart & Jean Tirole, 1990. "Vertical Integration and Market Foreclosure," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1990 Micr), pages 205-286.
    3. Patrick Rey & Thibaud Vergé, 2004. "Bilateral Control with Vertical Contracts," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 728-746, Winter.
    4. Dobson, Paul W. & Waterson, Michael, 2007. "The competition effects of industry-wide vertical price fixing in bilateral oligopoly," International Journal of Industrial Organization, Elsevier, vol. 25(5), pages 935-962, October.
    5. Michael A. Salinger, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(2), pages 345-356.
    6. DeGraba, Patrick, 1990. "Input Market Price Discrimination and the Choice of Technology," American Economic Review, American Economic Association, vol. 80(5), pages 1246-1253, December.
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    Cited by:

    1. Ghosh, Arghya & Morita, Hodaka & Wang, Chengsi, 2014. "Horizontal mergers in the presence of vertical relationships," Working Papers 14-27, University of Mannheim, Department of Economics.
    2. Gianpaolo Rossini & Cecilia Vergari, 2014. "The Discrete Charm of Uniform Linear Pricing of an Input Production Joint Venture," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 8(2), pages 68-83, October.
    3. Noriaki Matsushima & Laixun Zhao, 2010. "Multimarket linkages, buyer power, and the productivity puzzle," ISER Discussion Paper 0797, Institute of Social and Economic Research, Osaka University.
    4. Chrysovalantou Milliou & Joel Sandonis, 2018. "Manufacturer Mergers and Product Variety in Vertically Related Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 1-24, March.
    5. Ramon Fauli-Oller & Joel Sandonis, 2016. "Welfare Effects Of Downstream Mergers And Upstream Market Concentration," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(05), pages 1-16, December.
    6. Giacomo Calzolari & Vincenzo Denicolò & Piercarlo Zanchettin, 2020. "The demand‐boost theory of exclusive dealing," RAND Journal of Economics, RAND Corporation, vol. 51(3), pages 713-738, September.
    7. Garcia, Daniel & Janssen, Maarten, 2018. "Retail channel management in consumer search markets," International Journal of Industrial Organization, Elsevier, vol. 58(C), pages 162-182.
    8. V. Bhaskar & Nikita Roketskiy, 2021. "Consumer privacy and serial monopoly," RAND Journal of Economics, RAND Corporation, vol. 52(4), pages 917-944, December.
    9. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2015. "On vertical relations and the timing of technology adoption," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 117-129.
    10. Mérel, Pierre & Sexton, Richard J., 2017. "Buyer power with atomistic upstream entry: Can downstream consolidation increase production and welfare?," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 259-293.
    11. Chrysovalantou Milliou & Joel Sandonis, 2020. "Vertical foreign direct investment: Make, buy, and sell," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 884-912, August.
    12. Isabel Teichmann & Vanessa von Schlippenbach, 2014. "Collusive Effects of a Monopolist's Use of an Intermediary to Deliver to Retailers," Discussion Papers of DIW Berlin 1440, DIW Berlin, German Institute for Economic Research.
    13. ARA Tomohiro & Arpita CHATTERJEE & Arghya GHOSH & ZHANG Hongyong, 2019. "Input Tariff in Oligopoly: Entry, heterogeneity, and demand curvature," Discussion papers 19066, Research Institute of Economy, Trade and Industry (RIETI).
    14. Chrysovalantou Milliou & Apostolis Pavlou, 2020. "Foreign direct investment in vertically related markets," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(1), pages 284-320, February.
    15. Ioannis Pinopoulos, 2014. "Downstream Market Power and the Lerner Index," Discussion Paper Series 2014_07, Department of Economics, University of Macedonia, revised Nov 2014.

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