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- Title
Vertical collusion.
- Authors
Gilo, David; Yehezkel, Yaron
- Abstract
We characterize collusion involving secret vertical contracts between retailers and their supplier—who are all equally patient ("vertical collusion"). We show such collusion is easier to sustain than collusion among retailers. Furthermore, vertical collusion can solve the supplier's inability to commit to charging the monopoly wholesale price when retailers are differentiated. The supplier pays retailers slotting allowances as a prize for adhering to the collusive scheme and rejects contract deviations. In the presence of competing suppliers, vertical collusion can be sustained using short‐term exclusive dealing.
- Subjects
PRICE fixing; RETAIL industry; RETAIL industry suppliers; WHOLESALE prices; CONTRACTS; COLLUSION
- Publication
RAND Journal of Economics (Wiley-Blackwell), 2020, Vol 51, Issue 1, p133
- ISSN
0741-6261
- Publication type
Article
- DOI
10.1111/1756-2171.12308