Bilateral control and vertical contracts
Rey, Patrick and Vergé, Thibaud (2002) Bilateral control and vertical contracts. CMPO Working Paper, (02/048)
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Description/Abstract
When a manufacturer contracts secretly with competing retailers he is subject to opportunism, and linear or non-linear tariffs may not allow the manufacturer to maintain monopoly prices. To analyse the effects of RPM, O'Brien-Shaffer (1992) use a concept of contract equilibrium which concentrates on pairwise deviations thereby questioning the robustness of the analysis. This paper emphasises the distinction between the contract equilibrium and standard non-cooperative concepts. We advocate for some caution in the use of the former concept, as if overlooks an inexistence problem. We then confirm the intuition that RPM can help solve the manufacturer's commitment problem. This confirms that O'Brien-Shaffer's insight is robust and validates the courts' reluctance against RPM.
| Item Type: | Article |
|---|---|
| Related URLs: | |
| Subjects: | H Social Sciences > H Social Sciences (General) |
| Divisions: | University Structure - Pre August 2011 > School of Social Sciences > Economics |
| Item ID: | 33362 |
| Date Deposited: | 16 May 2006 |
| Last Modified: | 02 Mar 2012 13:28 |
| Contributors: | Rey, Patrick (Author) Vergé, Thibaud (Author) |
| Date: | 2002 |
| Status: | Published |
| Contact Email Address: | T.Verge@soton.ac.uk |
| URI: | http://eprints.soton.ac.uk/id/eprint/33362 |
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