In a two-tier industry with bottleneck upstream and two downstream firms producing vertically differentiated goods, we identify conditions under which the upstream supplier chooses exclusive or non-exclusive negotiations, or an English auction to sell its essential input. Auctioning off a two-part tariff contract is optimal for the supplier when its bargaining power is low and the final goods are not too differentiated. Otherwise, the supplier enters into exclusive or non-exclusive negotiations with the downstream firm(s). Finally, in contrast to previous findings, an auction is never welfare superior to negotiations

Bacchiega, E., Bonroy, O., Petrakis, E. (2020). Auctions vs. negotiations in vertically related markets. ECONOMICS LETTERS, 192, 1-4 [10.1016/j.econlet.2020.109198].

Auctions vs. negotiations in vertically related markets

Bacchiega, Emanuele;
2020

Abstract

In a two-tier industry with bottleneck upstream and two downstream firms producing vertically differentiated goods, we identify conditions under which the upstream supplier chooses exclusive or non-exclusive negotiations, or an English auction to sell its essential input. Auctioning off a two-part tariff contract is optimal for the supplier when its bargaining power is low and the final goods are not too differentiated. Otherwise, the supplier enters into exclusive or non-exclusive negotiations with the downstream firm(s). Finally, in contrast to previous findings, an auction is never welfare superior to negotiations
2020
Bacchiega, E., Bonroy, O., Petrakis, E. (2020). Auctions vs. negotiations in vertically related markets. ECONOMICS LETTERS, 192, 1-4 [10.1016/j.econlet.2020.109198].
Bacchiega, Emanuele; Bonroy, Olivier; Petrakis, Emmanuel
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/761959
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