Vertical contracting with endogenous market structure

• 成果类型: Article
• 署名作者: Pagnozzi, Marco; Piccolo, Salvatore; Reisinger, Markus
• 署名单位: University of Naples Federico II; University of Bergamo; Frankfurt School Finance & Management
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2021.105288
• 发表日期: 2021
• 关键词: Asymmetric information; Distribution network; opportunism; Retail market structure; Vertical contracting

摘要

We analyze vertical contracting between a manufacturer and retailers who have correlated private information. The manufacturer chooses the number of retailers and secretly contracts with each of them. We highlight how the interplay between the manufacturer's incentive to limit retail competition and the presence of asymmetric information shapes the optimal size of the distribution network. We show that a larger distribution network reduces retailers' information rents, and this may induce the manufacturer to choose a number of retailers that exceeds the socially optimal one. We also determine how the manufacturer's technology and the characteristics of demand affect the optimal network size. (C) 2021 Elsevier Inc. All rights reserved.