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Abstract

Vol. 57, No. 3, pp. 236-244 (2006)

“Price-Quantity Competition between Marketing Channels”
Tatsuhiko Nariu (Graduate School of Economics, Kyoto University), Hirotaka Suzuki (Graduate Student of Economics, Kyoto University)

Suppose that in a duopoly each producer sells his products through an affiliated retailer, and that the former can charge a franchise fee to the latter. Also suppose that the two retailers compete on quantity, although the two producers do on price. In this setting, each producer cuts his shipping price when the market demand shifts upward. Moreover, the shipping prices (which are usually strategic complements) become strategic substitutes.