A Comparison of the Wholesale Structure and the Agency Structure in Differentiated Markets

Liang Lu

Research output: Working paper

37 Citations (Scopus)

Abstract

We compare the wholesale structure and the agency structure characterizing a
supply and distribution chain in a bilateral duopoly model with differentiation,
based on which we examine firms’ preferences over the two structures.
Suppliers gain from the wholesale structure whereas retailers are better off
under the agency structure as long as the degree of differentiation at supplier
level is not too low. That is, while the high degrees of differentiation at one level
of the market in general benefit firms at that level and harm firms at the other
level under the wholesale structure, the two parties’ incentives are better
aligned under the agency structure.
Original languageEnglish
PublisherCentre for Competition Policy
Publication statusPublished - 2015

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