The Strategic Value of Quantity Forcing Contracts - Archive ouverte HAL Access content directly
Journal Articles American Economic Journal: Microeconomics Year : 2010

The Strategic Value of Quantity Forcing Contracts

David Martimort
  • Function : Author
  • PersonId : 1043577

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 forcing. First, restricting screening possibilities may increase retailers' rent. Second, such a restriction affects downstream competition. This latter effect may justify using quantity forcing contracts and, more generally, shed light on a novel source of contractual incompleteness.

Dates and versions

halshs-00754478 , version 1 (20-11-2012)

Identifiers

Cite

David Martimort, Salvatore  piccolo. The Strategic Value of Quantity Forcing Contracts. American Economic Journal: Microeconomics, 2010, 2 (1), pp.204-229. ⟨10.1257/mic.2.1.204⟩. ⟨halshs-00754478⟩
146 View
0 Download

Altmetric

Share

Gmail Facebook Twitter LinkedIn More