Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88094
Authors: 
Manasakis, Constantine
Vlassis, Minas
Year of Publication: 
2013
Series/Report no.: 
DICE Discussion Paper 118
Abstract: 
In a two-tier oligopoly, where the downstream firms are locked in pair-wise exclusive relationships with their upstream input suppliers, the equilibrium mode of competition in the downstream market is endogenously determined as a renegotiation-proof contract signed between each downstream firm and its exclusive upstream input supplier. We find that the upstream-downstream exclusive relationships credibly sustain the Cournot (Bertrand) mode of competition in the downstream market, when the goods are substitutes (complements). In contrast to previous studies, this result holds irrespectively of the degree of product differentiation and the distribution of bargaining power between the upstream and the downstream firm, over the pairspecific input price.
Subjects: 
Oligopoly
Vertical relations
Wholesale prices
Equilibrium mode of competition
JEL: 
D43
L13
L42
ISBN: 
978-3-86304-117-5
Document Type: 
Working Paper

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