Consider a three-tier industry with a monopolist supplying a manufacturer which sells its product to final consumers through two retailers. Contracts are linear and secret. Hence, upon receiving an out-of-equilibrium offer, each retailer must form a belief about the identity of the deviating upstream firm. This beliefs' specification problem wipes out if an Open Book Accounting (OBA) policy is implemented, whereby the input price is disclosed to retailers. Under Cournot (Bertrand) competition, OBA increases industry profits and consumer surplus if retailers believe that any out-of-equilibrium offer is more likely to reflect a deviation by the upstream supplier (by the manufacturer).

(2023). Vertical Contract Disclosure in Three‐Tier Industries* [journal article - articolo]. In JOURNAL OF INDUSTRIAL ECONOMICS. Retrieved from https://hdl.handle.net/10446/295672

Vertical Contract Disclosure in Three‐Tier Industries*

Bisceglia, Michele
2023-01-01

Abstract

Consider a three-tier industry with a monopolist supplying a manufacturer which sells its product to final consumers through two retailers. Contracts are linear and secret. Hence, upon receiving an out-of-equilibrium offer, each retailer must form a belief about the identity of the deviating upstream firm. This beliefs' specification problem wipes out if an Open Book Accounting (OBA) policy is implemented, whereby the input price is disclosed to retailers. Under Cournot (Bertrand) competition, OBA increases industry profits and consumer surplus if retailers believe that any out-of-equilibrium offer is more likely to reflect a deviation by the upstream supplier (by the manufacturer).
articolo
2023
Bisceglia, Michele
(2023). Vertical Contract Disclosure in Three‐Tier Industries* [journal article - articolo]. In JOURNAL OF INDUSTRIAL ECONOMICS. Retrieved from https://hdl.handle.net/10446/295672
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10446/295672
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