Essays on the Economics of Retailing: Payments, Finance and Vertical Restraints

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Title: Essays on the Economics of Retailing: Payments, Finance and Vertical Restraints
Author: Saxén, Frans
Contributor: Svenska handelshögskolan, institutionen för nationalekonomi, nationalekonomi
Hanken School of Economics, Department of Economics, Economics
Belongs to series: Economics and Society – 260
ISSN: 0424-7256 (printed)
2242-699x (PDF)
ISBN: 978-952-232-206-7 (printed)
978-952-232-207-4 (PDF)
Abstract: Much of the analysis of industrial organization implicitly assumes that firms sell directly to final consumers. However, many firms do not sell directly to the final consumers, but rather use intermediaries, such as wholesalers and retailers to distribute their products. The presence of such intermediaries affects significantly market outcomes. In particular, the contracts between manufacturers and retailers may significantly affect market outcomes, e.g. volumes and prices. Characteristic for these contracts is that they may contain vertical restraints, restrictions on what the retailers may do once they have acquired the products for resell. Another characteristic feature of these contracts is that they are typically devised by sophisticated contracting parties, who have strategic objectives. The reason for manufacturers, or upstream firms to impose vertical restraints on retailers, or downstream firms is that the actions of the downstream firms affect the upstream firm’s profits. While vertical restraints may affect the profitability of the contracting parties, they may also affect other agents, such as consumers and suppliers. In this dissertation I focus on three distinct aspects of vertical relations. I look at how providers of payment cards affect competition between retailers, through the no surcharge rule; how suppliers can expand their output by financing the establishment of new retailers; and how buyer alliances can extract surplus from suppliers through the use of market share contracts. Common to these essays is the strategic behavior by agents on one level affecting market outcomes at another vertical level.
Date: 2013-10-22
Subject: vertical relations
vertical restraints
supply chain finance
intermediate goods
cooperative investments
limited liability
loyalty discounts
market share contracts
buyer groups
no surcharge rule
retail financial services
payment card networks
debit cards
credit cards

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