Essays on anticompetitive effects of vertical contracts

Ueda, Shintaro (2019) Essays on anticompetitive effects of vertical contracts. Doctoral thesis, University of East Anglia.

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Abstract

The first half of this thesis focuses on the effect of conditional rebates by an incumbent when the firm’s product is a must stock for the buyer. It is inspired by the Intel case. The first essay analyses the baseline model and shows that although the incumbent can exclude the entrant by conditional rebate, the incumbent does not use the rebate to exclude the entrant, because just selling the must stock units with a high price is more profitable. Moreover, the model shows the limitation of the model in the sense that the incumbent has an ability to set incredibly high price to capture all the surplus of the market. Developing the main insight of the baseline model in the first essay, the second essay analyses four extended models to analyse the anticompetitive effects of conditional rebate and other pricing behaviours. The first extended model considers the case where the incumbent’s good is not literally ‘must stock’, but just has superiority over the competitors’ products. The results suggest that we can overestimate the exclusionary effect of conditional rebates when we erroneously assume a quite strong must stock property. The second, third and fourth extended models show that the incumbent can have an incentive to exclude a more efficient competitor in the following situations; 1) there is uncertainty about the must stock proportion, 2) there is uncertainty about demand size or 3) the must stock property is vulnerable in the sense that it becomes weaker if entry happens. The second half of this thesis develops a framework to analyse the competition through platforms that help consumers to get awareness of the sellers. It is motivated by the hotel booking platform cases. An informative advertising model is adapted to model platform investment. The third essay analyses the case where there are a monopoly platform and a monopoly seller and the effect of a narrow price parity clause on competition. The result shows that the introduction of the price parity clause increases the platform’s investment, which has a positive effect on the consumer surplus through giving more opportunity for consumers to become aware of the product. On the other hand, it also has a negative effect on consumer surplus by raising the direct sales price. In some situations, the net effect on consumer welfare can be negative. The fourth essay considers the case where there are duopoly platforms and duopoly sellers and analyses the effect of wide price parity clauses on competition. The results show that wide price parity clauses have a more straightforward effect on competition in the sense that the clauses make it possible for the platforms to avoid competition through undercutting commissions and so set their commissions at the collusive level. The analysis in this chapter shows that without wide price parity clauses the platforms try to undercut each other’s commissions, but the clauses eliminate the possibility of undercutting by the other platform. The result also shows that the introduction of the price parity clause increases the platform’s investment.

Item Type:	Thesis (Doctoral)
Faculty \ School:	Faculty of Social Sciences > School of Economics
Depositing User:	Katherine Whittaker
Date Deposited:	13 Feb 2020 14:45
Last Modified:	13 Feb 2020 14:45
URI:	https://ueaeprints.uea.ac.uk/id/eprint/74183
DOI:

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