Consumer‐benefiting exclusive territories

Canadian Journal of Economics - Tập 36 Số 4 - Trang 1007-1025 - 2003
Toshihiro Matsumura1
1Institute of Social Science, University of Tokyo

Tóm tắt

Abstract.  I investigate the effect of exclusive territories, which are typical vertical controls imposed by upstream firms. Using shipping spatial models, I consider an industry that consists of many independent local markets. An upstream monopolist restricts competition between downstream firms using exclusive territories. I find that exclusive territories reduce the prices of final products in all local markets in quantity‐setting competition. In price‐setting competition, they raise prices in half the local markets, reduce them in other markets, and also reduce the total consumer surplus. JEL classification: L42, R32

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