Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93995
Authors: 
Schutz, Nicolas
Year of Publication: 
2013
Series/Report no.: 
SFB/TR 15 Discussion Paper 439
Abstract: 
I develop a model in the spirit of Ordover, Saloner, and Salop (1990), in which two upstream firms compete to supply a homogeneous input to two downstream firms, who compete in prices with differentiated products in a downstream market. Upstream firms are allowed to offer exclusive two-part tariff contracts to the downstream firms. I show that, under very general conditions, this game does not have a subgame-perfect equilibrium in pure strategies. The intuition is that variable parts in such an equilibrium would have to be pairwise-proof. But when variable parts are pairwise-proof, downstream competitive externalities are not internalized, and there exists a profitable deviation. I contrast this non-existence result with earlier papers that found equilibria in similar models.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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