Supplier Fixed costs and Retail Market Monopolization

Caprice, Stéphane, von Schlippenbach, Vanessa and Wey, Christian (2014) Supplier Fixed costs and Retail Market Monopolization. TSE Working Paper, n. 14-524

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Official URL: http://tse-fr.eu/pub/28317

Abstract

Considering a vertical structure with perfectly competitive upstream firms that deliver a homogenous good to a differentiated retail duopoly, we show that upstream fixed costs may help to monopolize the downstream market. We find that downstream prices increase in upstream firms'fixed costs when both intra- and interbrand competition exist. Our findings contradict the common wisdom that fixed costs do not affect market outcomes.

Item Type: Monograph (Working Paper)
Language: English
Date: July 2014
Uncontrolled Keywords: Fixed Costs, Vertical Contracting, Monopolization
JEL codes: L13 - Oligopoly and Other Imperfect Markets
L14 - Transactional Relationships; Contracts and Reputation; Networks
L42 - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:48
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:28317
URI: http://publications.ut-capitole.fr/id/eprint/16531

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