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The economic theory of quasi-exclusive territory

Author

Listed:
  • Daisuke Nikae

    (Osaka City University)

  • Takeshi Ikeda

    (Osaka City University)

Abstract

This paper introduces the economic theory of "quasi-exclusive territory". We consider vertical dealings with two upstream firms and four downstream firms that compete in two separate markets. Under quasi- exclusive territory, downstream firms are bound to pay additional charges when selling goods beyond their territorial areas. We find that with respect to the two-part tariffs comprising a marginal price and a fixed fee, quasi-exclusive territory is more beneficial for upstream firms and more harmful for consumers than conventional exclusive territory. Moreover, we note that quasi-exclusive territory is in practice in various vertical dealings and that its regulation is a difficult task.

Suggested Citation

  • Daisuke Nikae & Takeshi Ikeda, 2005. "The economic theory of quasi-exclusive territory," Industrial Organization 0508002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpio:0508002
    Note: Type of Document - pdf; pages: 12
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0508/0508002.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Exclusive territory; Quasi-exclusive territory; Vertical dealings; Two-part tariff;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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