Vertical relationships

Retailer Entry Conditions and Wholesaler Conduct: The theatrical distribution of motion pictures (prior version was "Testing for Collusion" and before that "Measuring Market Power"), complete version linked but a shorter version is forthcoming in International Journal of Industrial Organization (2008), 26(4): 966-84.
    Abstract: I add to the empirical literature on vertical contracting and wholesaler conduct by using retailer entry conditions to infer unobserved choice variables and equilibrium responses to prices and advertising. After estimating the US demand for theatrical motion pictures from 1990-96, I apply these techniques to compare predictions under various distributor-conduct hypotheses to observed outcomes. While several caveats apply, results indicate that the hypothesis of competition among distributors fails to describe advertising levels or aggregate payments of theaters to studios. The hypothesis of some collusion among distributors, however, matches the data fairly well. (352 Kb, March 2007)

Who Should Handle Retail? Vertical contracts, customer service, and social welfare in a Chinese mobile phone market (with Jia Li), International Journal of Industrial Organization, forthcoming.
    Abstract: Using data on mobile phone handset sales from a single retail store, we examine the impact of different retail responsibility designations and vertical contracts on seller service provision, firm profitability, and social welfare. During our sample, this store switched from retailer-managed retailing with linear pricing contracts to manufacturer-managed retailing with revenue-sharing contracts. We estimate consumer demand and manufacturer cost parameters. Demand estimates indicate a large positive shift that coincided with the vertical change, consistent with improved retail customer service. Welfare estimates suggest that consumers derived substantial surplus from the improved customer service in addition to that from lowered prices.