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- Title
Inference on vertical contracts between manufacturers and retailers allowing for nonlinear pricing and resale price maintenance.
- Authors
Bonnet, Céline; Dubois, Pierre
- Abstract
We present a model of vertical contracts between manufacturers and retailers with nonlinear pricing strategies. Using home-scan data on bottled water produced by manufacturers and sold by retail chains in France, we estimate a structural demand and supply model allowing for two-part tariff contracts between manufacturers and retailers. Using price-cost margins recovered from estimates of demand parameters, we select the best supply model by performing nonnested tests, and find that manufacturers use two-part tariff contracts with resale price maintenance. We then perform counterfactual policy simulations that restrict the use of these vertical contracts and assess welfare effects under alternative scenarios.
- Subjects
CONTRACTS; INFERENCE (Logic); INDUSTRIALISTS; RETAIL industry; NONLINEAR pricing; PRICE maintenance
- Publication
RAND Journal of Economics (Wiley-Blackwell), 2010, Vol 41, Issue 1, p139
- ISSN
0741-6261
- Publication type
Article
- DOI
10.1111/j.1756-2171.2009.00093.x