IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-04986961.html
   My bibliography  Save this paper

Markups, Markdowns, and Bargaining in a Vertical Supply Chain

Author

Listed:
  • Rémi Avignon

    (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

  • Claire Chambolle

    (AgroParisTech, UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Etienne Guigue

    (Ludwig-Maximilians-Universität München (LMU))

  • Hugo Molina

    (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This article bridges monopoly, monopsony, and countervailing power theories to analyze the welfare effects of seller and buyer power in a vertical supply chain.We develop a bilateral monopoly with bargaining over a linear price, where the upstream firm sources input from an increasing supply curve, exerting monopsony power mirroring the downstream firm monopoly power. We leverage the shortside rule to endogenize which side sets the quantity traded in equilibrium. We show that welfare is maximized when each firm's bargaining power fully countervails the other's market power. Otherwise, double marginalization occurs: double markupization arises when the upstream firm holds excessive bargaining power, and double markdownization in the opposite case. Our analysis yields novel insights for policy intervention and empirical research.

Suggested Citation

  • Rémi Avignon & Claire Chambolle & Etienne Guigue & Hugo Molina, 2025. "Markups, Markdowns, and Bargaining in a Vertical Supply Chain," Working Papers hal-04986961, HAL.
    • Handle: RePEc:hal:wpaper:hal-04986961
    DOI: 10.2139/ssrn.5066421
    Note: View the original document on HAL open archive server: https://hal.science/hal-04986961v1
    as

    Download full text from publisher

    File URL: https://hal.science/hal-04986961v1/document
    Download Restriction: no
    File URL: https://libkey.io/10.2139/ssrn.5066421?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-04986961. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.