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This paper considers vertical restraints in a multi-market retail setting in which each retailer sells the complete line of manufactured goods. Vertical restraints by one manufacturer on the retailers of its product serve as an instrument to exert horizontal control over the retail price of a rival manufactured good. Applications are developed for supermarket retailing, where the manufacturer of a national brand sold at both supermarkets can employ vertical restraints to control the pricing of the retailerÂ’'s competing private labels, and for the personal computer industry, where the manufacturer of an essential computer component can use vertical restraints to control the pricing of complementary components bundled with the essential component by original equipment manufacturers (OEMs).

Keywords: contracting ; vertical restraints ; monopolization.

Subject(s): Marketing

Issue Date: 2006

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/21424

Total Pages: 31

JEL Codes: L13; L14; L42; D43.

Series Statement: Selected Paper

Record appears in: American Agricultural Economics Association (AAEA) > 2006 Annual meeting, July 23-26, Long Beach, CA





Author: Hamilton, Stephen F. ; Innes, Robert

Source: http://ageconsearch.umn.edu/record/21424?ln=en







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