Pass-through, vertical contracts, and bargains

Option Contracts and Vertical Foreclosure

A model of vertical integration is studied. Upstream firms sell differentiated inputs; downstream firms bundle them to make final products. Downstream products are sold as option contracts, which allow consumers to choose from a set of commodities at predetermined prices. The model is illustrated by examples in telecommunication and health markets. Equilibria of the integration game must result...

Disclosure Standards for Vertical Contracts

Information Leakage In Vertical Contracts

(Extended Abstract submitted for WISE 2004)

Vertical Relational Contracts and Trade Credit

This paper explores the consequences of using supplier trade credit within a vertical relational contract. The downstream firm operates in an environment where shocks may make it unable to repay. The shocks are unobservable to the supplier, which creates an asymmetric information problem. Trade credit limits the supplier’s possibilities to punish the downstream firm and termination is used in e...

Globalisation, Vertical Linkages, and ‘Relational Contracts‘

This paper analyses the consequences of trade liberalisation on firms’ internal organisation, with formal and informal arrangements. I extend the ’relational contract’ approach of Baker, Gibbons, and Murphy (2002) in an open economy set-up. I find that freer trade in final goods increases the quasi-rents from suppliers’ specific investments, leading to an increase in outsourcing. When trade lib...