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Bilateral control and vertical contracts

Record type: Article

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.

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Citation

Rey, Patrick and Vergé, Thibaud (2002) Bilateral control and vertical contracts CMPO Working Paper, (02/048)

More information

Published date: 2002

Identifiers

Local EPrints ID: 33362
URI: http://eprints.soton.ac.uk/id/eprint/33362
PURE UUID: bfe975f4-2d73-457d-a4a3-0578751e3b50

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Date deposited: 16 May 2006
Last modified: 17 Jul 2017 15:53

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Contributors

Author: Patrick Rey
Author: Thibaud Vergé

University divisions


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