Author: Seung-cheol LeePublisher:
ISBN:
Category :
Languages : en
Pages : 113
Book Description
Opportunism, Vertical Integration, and Exclusive Dealing Contracts Organisation
Author: Seung-cheol LeeOpportunism, Vertical Integration, and Exclusive Dealing Contracts in Cooperative Organization
Author: Seung-Cheol LeeExclusive Dealing and Vertical Integration
Author: Edward C. GallickPublisher:
ISBN:
Category : Restraint of trade
Languages : en
Pages : 162
Book Description
Exclusive Dealing and Vertical Integration in Interlocking Relationships
Author: Volker NockePublisher:
ISBN:
Category : Competition, Imperfect
Languages : en
Pages : 63
Book Description
We develop a model of interlocking bilateral relationships between upstream firms (manufacturers) that produce differentiated goods and downstream firms (retailers) that compete imperfectly for consumers. Contract offers and acceptance decisions are private information to the contracting parties. We show that both exclusive dealing and vertical integration between a manufacturer and a retailer lead to vertical foreclosure, to the detriment of consumers and society. Finally, we show that firms have indeed an incentive to sign such contracts or to integrate vertically.
Industrial Organization
Author: Paul BelleflammePublisher: Cambridge University Press
ISBN: 1107069971
Category : Business & Economics
Languages : en
Pages : 827
Book Description
Updated according to classroom feedback, this comprehensive textbook blends theory and formal models with real-world applications and take-away lessons.
The Theory of the Firm
Author: Nicolai J. FossPublisher: Taylor & Francis
ISBN: 9780415196406
Category : Business enterprises
Languages : en
Pages : 360
Book Description
Exclusive Dealing, the Theory of the Firm, and Raising Rivals' Costs
Author: Alan J. MeesePublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
For several decades antitrust courts were extremely hostile to exclusive dealing agreements, banning such contracts, regardless of their benefits, whenever the manufacturer held a significant market share. The FTC went even further, banning such agreements whenever the manufacturer had a non-trivial share of its market. This article attributes the original hostility to exclusive dealing contracts to neoclassical price theory's technological theory of the firm and its derivative model of workable competition. According to price theory, firms existed to allocate resource and realize efficiencies of a technological nature that, by their nature, arose within the firm. At the same time, price theory identified no beneficial explanation for partial ᑼontractualň integration. The result was the so-called Ňworkable competitionň model, which privileged Ňunilateralň ᑼompetition on the meritsň over ᑼoncertedň ᑼontractual integration, the latter of which was presumed to have market power origins. The article then recounts two responses to this hostility. The first response, from Ňwithinň price theory, came from the Chicago School, which argued that a firm with market power could only realize one monopoly profit, with the result that exclusive dealing contracts could not ᑾnhanceň the power that a firm otherwise possessed. Unlike, say, the Chicago School account of minimum resale price maintenance, this attack on conventional wisdom offered no affirmative wealth-creating reason that firms would adopt such agreements. Instead, Chicagoans simply inferred that such agreements produced benefits because they supposedly could not create harms. The second response ő Transaction Cost Economics or TCE ő sought to undermine price theory itself, or at least its conception of the firm and other non-standard contracts. Unlike the Chicago School, TCE offered to explain how exclusive dealing within and between firms produced benefits. In particular, TCE argued that complete and partial integration was a method of reducing or eliminating the costs of relying upon unbridled markets to conduct economic activity, particularly costs flowing from anticipated opportunism. Exclusive dealing, it was said, was no exception, and economists have identified several beneficial effects that such contracts can create. Unlike the Chicago School, TCE did not contend that exclusive dealing contracts could never reduce welfare. Still, TCE helped undermine the unmitigated hostility that once characterized antitrust's attitude toward exclusive dealing contracts. Raising Rivals'Costs (RRC) theory, it is shown, filled the void left by price theory's discredited lesson that exclusive dealing agreements were almost always harmful. That is, RRC offered a coherent and plausible theory regarding how such agreements may, in certain circumstances, raise the costs of rivals and facilitate the acquisition or protection of market power. The article ends by attempting to integrate the lessons of TCE and RRC theory with a view toward developing a standard for evaluating exclusive dealing arrangements that reflects the lessons of both paradigms, neither of which purports to exclude the other as a useful tool for interpreting such agreements. The essay critiques certain aspects of modern rule reason analysis as applied to exclusive dealing arrangements. Thus, it is argued, mere significant foreclosure of rivals from portions of the marketplace should not establish a prima facie case requiring the defendant to establish that the restraint produces benefits. Nor should courts allow plaintiffs to establish a prima facie case based simply upon a showing that such contracts result in prices that are higher than those that existed before the restraint. Moreover, if courts allow plaintiffs to establish a prima facie case based upon such showings, then there is no basis for lancingň the benefits that the defendant proves against harms that are presumed once a plaintiff makes out a prima facie case, as such balancing depends upon the assumption that benefits coexist with harms, harms not logically presumed once the defendant shows that the restraint produces significant benefits. Instead, the essay concludes, plaintiffs seeking to establish a prima facie case should be required to establish the numerous conditions, including relevant input markets, output markets, and barriers to entry, that are necessary to any raising rivals' costs strategy. Once the plaintiff establishes such a case, the defendant should be allowed to establish that the arrangement produces benefits. Those who embrace a Ňpurchaser welfareň approach to antitrust have not explained how courts should go about balancing the harms produced by such agreements against their benefits, given that such agreements might harm some consumers while benefitting others. At the same time, those who embrace a Ňsocialň or Ňtotal welfareň approach to antitrust may be content if courts declare Ňlawfulň any such agreement that produces significant benefits.
Opportunism in supplier-buyer relationships
Author: Sebastian SchultePublisher: diplom.de
ISBN: 3956361490
Category : Business & Economics
Languages : en
Pages : 114
Book Description
Inhaltsangabe:Abstract: In 1996, managers of U.S. based automaker Ford Corporation realized that they had been fooled: The decision to allocate the company s seat construction to the single supplier Lear Corporation had turned out to be a disaster. Lear had made unrealistic promises concerning their engineering talent in order to get into business with the major carmaker. As Ford was locked-in with a supplier that was unable to keep deadlines and that produced parts that did not work, the production and on time launch of the 1996 version of Ford Taurus were severely put at risk. In this industry example, the supplier behaved opportunistically towards the buyer by misrepresenting the true skills of its employees. According to Transaction Cost Economics (TCE), opportunism is considered as an endogenous factor it forms an inherent part of business relationships. Following Williamson s explanation, opportunism is one of the rudimentary attributes of human nature . Whenever individuals will be given the chance to act opportunistically, they will do so. However, taking a look at current literature, the classical view of opportunism as a ubiquitous phenomenon becomes unsustainable. The emergence and degree of opportunistic behaviour is influenced by a variety of antecedent factors, such as institutional environment (e.g., competition, technology), or social determinants of behaviour (e.g., commitment, trust). Psychological research on this topic has shown that TCE lacks an explicit distinction between opportunism as an attitude and as a type of behaviour or action. Whether an agent behaves opportunistically or not does not only depend on his inclination towards carrying out unfair business practices, but also on the incentives that are given to him. Furthermore, recent approaches drawing on Agency Theory have replaced the traditional model of a self-serving man by an agent showing cooperative behaviours, as described in Stewardship Theory. In his original version of TCE, Williamson relied on vertical integration as an effective governance mechanism to attenuate opportunism and to safeguard specific investments. Transactions with high asset specificity should be governed by hierarchy mechanisms that are not accessible to markets, such as intensive monitoring or incentive structures. As a result, transaction costs would be minimized. In fact, hierarchical controls should not be treated as a universal remedy to curtail unfair business practices [...]
Handbook of Industrial Organization
Author: Mark ArmstrongPublisher: Elsevier
ISBN: 008055184X
Category : Business & Economics
Languages : en
Pages : 943
Book Description
This is Volume 3 of the Handbook of Industrial Organization series (HIO). Volumes 1 & 2 published simultaneously in 1989 and many of the chapters were widely cited and appeared on graduate reading lists. Since the first volumes published, the field of industrial organization has continued to evolve and this volume fills the gaps. While the first two volumes of HIO contain much more discussion of the theoretical literature than of the empirical literature, it was representative of the field at that time. Since then, the empirical literature has flourished, while the theoretical literature has continued to grow, and this new volume reflects that change of emphasis.Thie volume is an excellent reference and teaching supplement for industrial organization or industrial economics, the microeconomics field that focuses on business behavior and its implications for both market structures and processes, and for related public policies.*Part of the renowned Handbooks in Economics series*Chapters are contributed by some of the leading experts in their fields*A source, reference and teaching supplement for industrial organizations or industrial economists
The Feasibility of Exclusive Dealing and Partial Vertical Integration
Author: Myung-Joong KwonPublisher:
ISBN:
Category : Economics
Languages : en
Pages :
Book Description