Non Linear Contracting and Endogenous Buyer Power between Manufacturers and Retailers: Empirical Evidence on Food Retailing in France

Bonnet, Céline and Dubois, Pierre (2010) Non Linear Contracting and Endogenous Buyer Power between Manufacturers and Retailers: Empirical Evidence on Food Retailing in France. TSE Working Paper, n. 10-189, Toulouse

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Official URL: http://tse-fr.eu/pub/23205

Abstract

We present the first empirical estimation of a structural model taking into account explicitly the endogenous buyer power of downstream players facing two part tariffs contracts offered by the upstream level. We consider vertical contracts between manufacturers and retailers where resale price maintenance may be used with two part tariffs and allow retailers to have some endogenous buyer power from the horizontal competition of manufacturers. Our contribution allows to recover price-cost margins at the upstream and downstream levels in these different structural models using the industry structure and estimates of demand parameters. We apply it to the market of bottled water in France, estimating a mixed logit demand model on individual level data. Empirical evidence shows that two part tariffs contracts are used with no resale price maintenance and that the buyer power of supermarket chains is endogenous to the structure of manufacturers competition.

Item Type: Monograph (Working Paper)
Language: English
Date: August 2010
Place of Publication: Toulouse
JEL codes: C12 - Hypothesis Testing
C33 - Models with Panel Data
L13 - Oligopoly and Other Imperfect Markets
L81 - Retail and Wholesale Trade; Warehousing; e-Commerce
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 18 Jan 2012 06:02
Last Modified: 19 Mar 2018 15:42
OAI ID: oai:tse-fr.eu:23205
URI: http://publications.ut-capitole.fr/id/eprint/3420

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