DMCA
The Strategic Value of Quantity Forcing Contracts”, CSEF working paper (2008)
| Citations: | 4 - 2 self |
BibTeX
@MISC{Martimort08thestrategic,
author = {David Martimort and Salvatore Piccolo},
title = {The Strategic Value of Quantity Forcing Contracts”, CSEF working paper},
year = {2008}
}
Share
 |
 |
 |
 |
||
OpenURL
Abstract
We explore the strategic value of quantity forcing contracts in a manufacturer-retailer environment under both adverse selection and moral hazard. Manufacturers dealing with (exclusive) competing retailers may prefer to leave contracts silent on retail prices, whenever other aspects of the retailers ’ activity remain nonverifiable. Two effects are at play when moving from retail price maintenance to quantity forc-ing. First, restricting screening possibilities may increase retailers ’ rent. Second, such restriction affects downstream competition. This latter effect may justify us-ing quantity forcing contracts and, more generally, shed light on a novel source of contractual incompleteness.
