Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148185
Authors: 
Matsushima, Noriaki
Year of Publication: 
2016
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 958
Abstract: 
We provide a model in which upstream producers, whose production cost is quadratic in quantity, sell their products through two distribution channels, a traditional channel and an external retailer. Some producers (called "large" producers) supply to both channels, whereas other producers (called "small" producers) are only able to supply to the traditional channel. All producers compete in quantity in the traditional channel. The external retailer offers a nondiscriminatory per unit payment to upstream producers. We show that distribution channel expansion executed by a small producer can decrease the producer's profit and the sum of the upstream producers' profits.
Subjects: 
channel expansion
dual channel
increasing marginal cost
retailers
JEL: 
L13
D43
Q13
M31
Document Type: 
Working Paper

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