Dear colleague,

The next research seminar, which you are invited to attend, will take place on 25th of September, 11h30, Américo Amorim Building (Room 5), and will be presented by Flávio Menezes, on the topic “Dealership Equilibria in Oligopoly”.

Tina Kao (a), Flávio Menezes (b), John Quiggin (b)
(a)Australian National University
(b) University of Queensland


Flavio Menezes is Professor of Economics at the University of Queensland and Vice President of the Economic Society of Australia (QLD). He served as Head of the School of Economics at UQ from 2009 to 2015, was the founding Director of the Australian Centre of Regulatory Economics at the Australian National University and Vice President of Charles Rivers International. He has published extensively on the economics of auctions, competition, and regulation, and has a successful track record in obtaining ARC funding and in PhD supervision. He is one of Australia’s most influential economists in terms of practical policymaking. He has advised the Federal Government, Federal and State agencies (AEMC, ACCC, IPART, QCA), and the Victorian and Queensland Governments on market design issues in regulatory environments, as well as various private and public organisations on mergers, competition policy, and regulatory issues in defence, energy, water, banking, health, transport, and telecommunications. Outside of Australia, he has provided advice on privatization of public utilities, reform of electricity regulation, competition issues in banking, health, telecommunications, and dairy industries and he has reviewed government procurement practices.

Abstract

This paper investigates why oligopolistic manufacturers may choose to sell their products through an independent dealer rather than directly to final consumers. In our model, manufacturers can observe neither the realised demand nor the sales services provided by the dealer and must incur a monitoring cost to ascertain the sales services provided. Manufacturers choose a permissible discount, followed by a price-quantity target to be implemented by the dealer. We show that if the monitoring cost parameter is too high, the …rm might deprive the dealer of any decision power by behaving like a Bertrand competitor. This is akin to a no-dealership equilibrium. For sufficiently low values of a monitoring cost parameter, the …firm chooses the degree of ‡flexibility for their dealer, and the equilibrium market outcome ranges from Cournot to Bertrand contingent on the parameter.

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Please confirm your attendance until September 24th by e-mailing Mara Carvalho (macarvalho@porto.ucp.pt)

 
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