Price and Quantity Competition under Vertical Pricing

Basak, Debasmita

Abstract

We consider a vertically related market where one quantity setting and another price setting downstream firm negotiate the terms of a two-part tariff contract with an upstream input supplier. In contrast to the traditional belief, we show that the price setting firm produces a higher output and earns a higher profit than the quantity setting firm when bargaining is decentralised. And, both firms produce the same output whereas the profit is higher under the price setting firm than the quantity setting firm when bargaining is centralised.

Citation

Basak, D. (2023). Price and Quantity Competition under Vertical Pricing. Games, 14(4), Article 53. https://doi.org/10.3390/g14040053

• Journal Article Type: Article
• Acceptance Date: Jun 21, 2023
• Online Publication Date: Jun 29, 2023
• Publication Date: Jun 29, 2023
• Deposit Date: Sep 18, 2023
• Publicly Available Date: Sep 19, 2023
• Journal: Games
• Electronic ISSN: 2073-4336
• Publisher: MDPI
• Peer Reviewed: Peer Reviewed
• Volume: 14
• Issue: 4
• Article Number: 53
• DOI: https://doi.org/10.3390/g14040053
• Keywords: Bargaining; Bertrand; Cournot; Two-part tariffs; Vertical pricing JEL Classification: D43; L13; L14
• Public URL: https://nottingham-repository.worktribe.com/output/25361937
• Publisher URL: https://www.mdpi.com/2073-4336/14/4/53