Abstract
This paper generalizes the result of Alipranti et al. (2014) regarding the wholesale prices: I prove that upstream firms always charge the wholesale prices above (below) their marginal costs in case of Bertrand (Cournot) competition downstream. Alipranti et al. (2014) demonstrates this result for the case of linear demand functions and monopolist that sells its product to two retailers. I relax the assumption of linear demands, allow for arbitrary number of retailers and for the competition upstream.
JEL codes
- D43: Oligopoly and Other Forms of Market Imperfection
- L13: Oligopoly and Other Imperfect Markets
- L14: Transactional Relationships • Contracts and Reputation • Networks
Reference
Olga Rozanova, “Price vs. quantity competition in vertically related markets. Generalization”, Economics Letters, vol. 135, October 2015, pp. 92–95.
Published in
Economics Letters, vol. 135, October 2015, pp. 92–95