Non Linear Contracting and Endogenous Buyer Power between Manufacturers and Retailers: Empirical Evidence on Food Retailing in France



Then, the firm f profits are

π = ∑ (ws - μ^3s(p)+ Σ2 f

sGf                   sEGf

= Σ2 (w- ^s)ʤ(p)+ 52 (pj - w - ci)¾(p)- Σ2 Fj - 22 π

sGf                     j=l,..,J                          jGf      r=l,.,R

Since, producers fix the fixed fees given the ones of other producers, we have that under resale
price maintenance :

max ∏
{^i1PiliGf

^ m max Σ2 (ws - μs)ss(p) + 52 (Pj - wj - cj)Sj(p)
^p'iiGf sEGf                      j=l,..,J

^ max 5 (Ps - μss(p) + 5J (Ps - Ws - Cs's(p')
Ppi^iGf sQGf                      s?Gf

and with no resale price maintenance

max ∏

{pi,wi}iGf


& m max 52 (w - ps)ss(P) + 52 (Pj - w - cj)sj(P)
( Wi к ∙cr, ‘                                        ‘ *

w i Gf sQGf                        j=l,..,J

maχ V (ps - μs)ss(p) + V (ps - W - cs')ss{p)

W«G, sCGf              syGf

Then the first order conditions of the different two part tariffs models can be derived very simply.

7.3 First stage estimation

Dependent variable : pj-t

Coefficient   Std. Error

Wage index

0.0037

0.0008

Plastic price

-0.0003

0.0008

Diesel oil price

0.0007

0.0004

λb(yyλr(7∙) are not shown

N

728”

^-               ~

__________0.98

Table 7 : First stage regression OLS regression of prices

7.4 Additional formula for the demand model (not for publication)

Remind that the average choice probability of buying j at period t is :

sjt


1 ⅝ ⅝N

N 2^lP'jt

1 v^ʌ'   [

N 5 √ ■ ι I Fijt(ai)f {,ai)dai

40



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