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DIRECT SALE OR INDIRECT SALE? EFFECTS OF SHAREHOLDING *
Author(s) -
OKAMURA MAKOTO,
NARIU TATSUHIKO,
IKEDA TAKESHI
Publication year - 2011
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2010.02172.x
Subject(s) - stackelberg competition , business , stock (firearms) , industrial organization , microeconomics , economics , commerce , mechanical engineering , engineering
In this paper we study a vertical structure in which a manufacturer holds stock with its retailer but it allows the retailer to choose the quantity. We show that in the case when a single wholesale firm operates, it completely owns its retailing firm in equilibrium and acts as a Stackelberg leader. We also examine a case where two wholesale firms operate. We observe that each firm owns its retail firm completely when the direct effect of share holding dominates the strategic effect among the wholesale and the retail firms.