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Wholesale Pricing with Incomplete Information about Private Label Products
This article provides a theoretical model analyzing wholesale pricing tariffs set by a monopolistic manufacturer for its branded product that is sold to final customers by a monopolistic retailer. The bargaining power of the downstream retailer is strengthened by offering also a vertically diffe...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 36-2017) |
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| Main Author: | |
| Format: | Article |
| Language: | English |
| Published: |
Philipps-Universität Marburg
2017
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | This article provides a theoretical model analyzing
wholesale pricing tariffs set by a monopolistic manufacturer for its
branded product that is sold to final customers by a monopolistic
retailer. The bargaining power of the downstream retailer is
strengthened by offering also a vertically differentiated private label
product whose production costs are known only incompletely to the
upstream manufacturer. The model shows that the manufacturer
can avoid double marginalization and implement the full information
outcome by combining a quantity discount with a market-share
discount where only a retailer with a strong private label retroactively
receives an allowance. Under these circumstances it is unprofitable
for the manufacturer to impose exclusive dealing on the retailer. |
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| Physical Description: | 37 Pages |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0471 |