Endogenous choice of price or quantity contract and the implications of two-part-tariff in a vertical structure

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Basak, Debasmita and Wang, Leonard F.S. (2016) Endogenous choice of price or quantity contract and the implications of two-part-tariff in a vertical structure. Economics Letters, 138 . pp. 53-56. ISSN 0165-1765

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Official URL: https://www.sciencedirect.com/science/article/pii/S0165176515004929

Abstract

We re-investigate the endogenous choice of price (Bertrand) and quantity (Cournot) contract in the presence of a vertically related upstream market for input. We find that choosing price contract is the dominant strategy for downstream firms when the two-part-tariff pricing contract is determined through centralised Nash bargaining. We further show that the level of social welfare is the same regardless of the mode of product market competition (i.e., Bertrand or Cournot).

Item Type:	Article
RIS ID:	https://nottingham-repository.worktribe.com/output/771274
Keywords:	Bargaining; Bertrand; Cournot; Two-part tariffs; Vertical pricing; Welfare
Schools/Departments:	University of Nottingham, UK > Faculty of Social Sciences > Nottingham University Business School
Identification Number:	10.1016/j.econlet.2015.11.026
Depositing User:	Eprints, Support
Date Deposited:	31 May 2018 12:24
Last Modified:	04 May 2020 17:29
URI:	https://eprints.nottingham.ac.uk/id/eprint/52149

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