Competition between Physical and Electronic Content Retailers

We investigate a model in which monopoly supplier distributes two types of its product through traditional retailer with wholesale price contract and an online agency contract. Because such eliminates the double marginalization problem, has cost advantage over retailer. Given retailer, we also consider possible request by retailer: retail is not smaller than for obtain following results. An increase retailer's bargaining power benefits retailers but harms supplier. Under to protect strictly higher that baseline model. The retailers' equilibrium prices are those