Download or read book Essays in Vertical Markets with Consumer Search written by Edona Reshidi and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three essays that study issues arising in vertical markets with consumer search. The first essay analyses wholesale price discrimination, the second essay examines vertical bargaining and obfuscation and the third essay evaluates the effect of regulated recommended retail prices. In the first essay we show that manufacturers have an incentive to offer different retailers different contracts. The mechanism relies on consumers having heterogeneous search costs. Expecting price dispersion in the retail market, consumers are induced to search. Low-cost retailers sell to a disproportionately larger share of low search cost consumers, while high-cost retailers also lower margins given their smaller customer base. In this way, by discriminating, manufacturers can create a more competitive retail market and increase their profits. We find that consumers can be better off under wholesale price discrimination. The second essay models manufacturer practices that impede consumer search. Examples include vertical informational restraints such as Minimum Advertised Prices (MAPs) and bans on online sales. We find that once the bargaining power rests with the manufacturer, the equilibrium involves no obfuscation. The final consumers, however, are worse off compared to settings when the retailers have all the bargaining power. We show that policies that impose caps on obfuscation may backfire since they induce higher wholesale and retail prices. Finally, the third essay studies the effect of regulation that requires some sales to take place at Recommended Retail Prices (RRPs). We argue that this regulation enables manufacturers to commit to their unobserved contracts and discriminate their retailers. Given the regulation, manufacturers are not free to deviate and sell to all retailers at lower wholesale prices that generate more profits. We show that without this regulation on RRPs only uniform pricing can be sustained as an equilibrium outcome and that consumers would be better off.