TY  - JOUR
AU  - Rey,Patrick
AU  - Stiglitz,Joseph E.
TI  - Vertical Restraints and Producers' Competition
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2601
PY  - 1990
Y2  - February 1990
UR  - http://www.nber.org/papers/w2601
L1  - http://www.nber.org/papers/w2601.pdf
N1  - Author contact info:
Joseph E. Stiglitz
Uris Hall, Columbia University
3022 Broadway, Room 814
New York, NY  10027
Tel: 212/854-0671
Fax: 212/662-8474
E-Mail: jes322@columbia.edu
M2  - featured in NBER digest on 1988-07-01
AB  - This paper examines the rationale for vertical restraints. It shows that there are important circumstances under which these restrictions have significant anti-competitive effects. The paper focuses on the consequences of exclusive territorial arrangements among the retailers of two products which are imperfect substitutes. Such arrangements are shown to increase consumer prices; under plausible conditions the increase in consumer prices is sufficiently large to more than offset the deleterious effects from "double marginalization" resulting from reduced competition among retailers. The imposition of exclusivity provisions is may be part of a Nash equilibrium among producers. These results hold whether there are or are not franchise fees.
ER  -