Vertical integration through Rubinstein bargaining
We consider a vertical structure in which an upstream manufacturer bargains with a downstream retailer over the price of an intermediate good. In an alternating offers framework, we show that when the managers of the firms can choose their response time in the negotiation that the solution conforms either to the non-intergrated or fully integrated structure from standard models of successive monopoly.
CitationEconomics Bulletin 32(2012) nr. 3 s. 2522-2529
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