Contracting, Exclusivity and Incomplete Distribution Networks
63 Pages Posted: 23 Nov 2014 Last revised: 9 Jan 2020
Date Written: January 8, 2020
Whereas in some industries retailers distribute the products of all suppliers, in other industries they differentiate themselves from their rivals by becoming the exclusive distributors of some products, which results in incomplete distribution networks. To study this phenomenon, I analyze a model where retailers first play a decentralized, multilateral contracting game with suppliers and then compete in the downstream market. I use this model to study the equilibrium structure of distribution networks under different assumptions regarding supplier and retailer differentiation, the mode of downstream competition, the availability of exclusive contracts and two-part tariffs, and the presence of hold-up in negotiations.
Note: Currently being revised, a new version will be available at the end of April 2015.
Keywords: Bilateral duopoly, contracting, exclusivity, incomplete distribution networks
JEL Classification: L13, L14, D43, D85
Suggested Citation: Suggested Citation