A Comparison of the Wholesale Model and the Agency Model in Differentiated Markets |
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Authors: | Liang Lu |
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Institution: | 1.Centre for Competition Policy,University of East Anglia,Norwich,UK |
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Abstract: | We compare the wholesale model and the agency model that characterise a vertical relation in a bilateral duopoly framework. Results suggest that the agency model may be regarded as an example of retailer power resale price maintenance and provide an economic view of why restraints of this kind should be evaluated under the rule of reason. While competition is more likely to be undercut under the agency model, relative to the wholesale model, the agency model benefits consumers by offering relatively lower retail prices and greater demand. |
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