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Entry and Product Variety with Competing Supply Chains.

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Title: Entry and Product Variety with Competing Supply Chains.
Authors: Pagnozzi, Marco1 pagnozzi@unina.it, Piccolo, Salvatore2 salvapiccolo@gmail.com, Bassi, Matteo3 matteo.bassi@gmail.com
Source: Journal of Industrial Economics. Sep2016, Vol. 64 Issue 3, p520-556. 37p.
Subjects: Supply chain management, Business names, Contracts, Information asymmetry, Retail industry
Abstract: We study a model where an endogenous number of competing manufacturers located around a circle contract with exclusive retailers who are privately informed about their costs. The number of brands in the market (determined by the manufacturers' zero profit condition) depends on the presence of asymmetric information and on the types of contracts between manufacturers and retailers. With two-part tariffs, wholesale prices fully reflect retailers' costs; with linear contracts, wholesale prices are constant and independent of retailers' costs. The number of brands is lower ( resp. higher) with asymmetric information than with complete information when contracts are linear ( resp. with two-part tariffs). Moreover, although the number of brands is always higher with linear contracts than with two-part tariffs, joint profits of manufacturers and retailers are higher with linear prices. We also discuss manufacturers' incentives to choose different contract forms and analyze the effects of endogenous entry on welfare. [ABSTRACT FROM AUTHOR]
Copyright of Journal of Industrial Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
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  Data: Entry and Product Variety with Competing Supply Chains.
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  Data: <searchLink fieldCode="AR" term="%22Pagnozzi%2C+Marco%22">Pagnozzi, Marco</searchLink><relatesTo>1</relatesTo><i> pagnozzi@unina.it</i><br /><searchLink fieldCode="AR" term="%22Piccolo%2C+Salvatore%22">Piccolo, Salvatore</searchLink><relatesTo>2</relatesTo><i> salvapiccolo@gmail.com</i><br /><searchLink fieldCode="AR" term="%22Bassi%2C+Matteo%22">Bassi, Matteo</searchLink><relatesTo>3</relatesTo><i> matteo.bassi@gmail.com</i>
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  Data: <searchLink fieldCode="JN" term="%22Journal+of+Industrial+Economics%22">Journal of Industrial Economics</searchLink>. Sep2016, Vol. 64 Issue 3, p520-556. 37p.
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  Data: <searchLink fieldCode="DE" term="%22Supply+chain+management%22">Supply chain management</searchLink><br /><searchLink fieldCode="DE" term="%22Business+names%22">Business names</searchLink><br /><searchLink fieldCode="DE" term="%22Contracts%22">Contracts</searchLink><br /><searchLink fieldCode="DE" term="%22Information+asymmetry%22">Information asymmetry</searchLink><br /><searchLink fieldCode="DE" term="%22Retail+industry%22">Retail industry</searchLink>
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  Label: Abstract
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  Data: We study a model where an endogenous number of competing manufacturers located around a circle contract with exclusive retailers who are privately informed about their costs. The number of brands in the market (determined by the manufacturers' zero profit condition) depends on the presence of asymmetric information and on the types of contracts between manufacturers and retailers. With two-part tariffs, wholesale prices fully reflect retailers' costs; with linear contracts, wholesale prices are constant and independent of retailers' costs. The number of brands is lower ( resp. higher) with asymmetric information than with complete information when contracts are linear ( resp. with two-part tariffs). Moreover, although the number of brands is always higher with linear contracts than with two-part tariffs, joint profits of manufacturers and retailers are higher with linear prices. We also discuss manufacturers' incentives to choose different contract forms and analyze the effects of endogenous entry on welfare. [ABSTRACT FROM AUTHOR]
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  Data: <i>Copyright of Journal of Industrial Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.)
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      – SubjectFull: Contracts
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      – SubjectFull: Information asymmetry
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