Retail Channel Management in Consumer Search Markets

Publications: Working paper


We study how a monopoly manufacturer optimally manages her contractual
relations with retailers in markets with consumer search. By choosing wholesale
prices, the manufacturer affects the degree of competition between retailers and
the incentives of consumers to search. We show that depending on whether or not the manufacturer can commit to her price decisions and on the search cost, the manufacturer may be substantially better off choosing her wholesale prices not independent of each other, consciously allowing for asymmetric contracts. Thus, our analysis may shed light on when we may expect sales across different retailers to be positively or negatively correlated. Our model may be able to generate loss leaders at the wholesale level and show the rationale for creating "premium resellers".
Original languageEnglish
Place of PublicationMünchen
Number of pages30
Publication statusPublished - Oct 2016

Publication series

SeriesMPRA : Munich Personal RePEc Archive

Austrian Fields of Science 2012

  • 502013 Industrial economics

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