Monopoly Supply Chain Management via Rubinstein Bargaining

D 2011

Monopoly Supply Chain Management via Rubinstein Bargaining

KVASNIČKA, Michal, Rostislav STANĚK and Ondřej KRČÁL

Basic information

Original name

Monopoly Supply Chain Management via Rubinstein Bargaining

Name in Czech

Management monopolního dodavatelsko-odběratelského řetězce skrze Rubinsteinovo vyjednávání

Authors

KVASNIČKA, Michal (203 Czech Republic, guarantor, belonging to the institution), Rostislav STANĚK (203 Czech Republic, belonging to the institution) and Ondřej KRČÁL (203 Czech Republic, belonging to the institution)

Edition

1. vyd. Prague, Proceedings of the 29th International Conference Mathematical Methods in Economics 2011, p. 431-436, 6 pp. 2011

Publisher

University of Economics, Faculty of Informatics and Statistics

Other information

Language

English

Type of outcome

Stať ve sborníku

Field of Study

50200 5.2 Economics and Business

Country of publisher

Czech Republic

Confidentiality degree

není předmětem státního či obchodního tajemství

Publication form

printed version "print"

References:

URL

RIV identification code

RIV/00216224:14560/11:00074558

Organization unit

Faculty of Economics and Administration

ISBN

978-80-7431-058-4

UT WoS

000309074600071

Keywords (in Czech)

vertikální integrace; dvojí marginalizace; Rubinsteinovo vyjednávání; IO; politika konkurence

Keywords in English

vertical integration; double markup; Rubinstein bargaining; industrial organization; competition policy

Abstract

ORIG CZ

V originále

This paper argues that the Spengler’s (JPE, 1950) double-markup story does not capture the strategic situation faced by a monopoly supply chain. We show that 1) the Spengler’s double-markup model is equivalent to an extensive game in which the upstream monopoly has all power to set the intermediate price, and the downstream monopsony has no bargaining power. This assumption seems unrealistic. 2) We model this situation using the Rubinstein bargaining. The equilibrium of our model does not yield a double markup. Hence, the joint output, the consumers price, and the total profit is as high as those of a vertically integrated firm. Moreover, the profit is split roughly equally between the two firms. 3) Our model has different implications for the competition policy.

In Czech

Článek tvrdí, že Spenglerův model dvojí marginalizace (JPE, 1950) nepopisuje dobře strategickou situaci, které čelí firmy v monopolním dodavatelsko-odběratelském řetězci. Ukazujeme, že 1) Spenglerův model dvojí marginalizace je ekvivalentní extenzivní hře, ve které horní monopl má plnou sílu stanovit cenu meziproduktu, zatímco dolní monopol nemá žádnou vyjednávací sílu. Tento předpoklad se zdá být nerealistický. 2) Modelujeme tuto situaci s pomocí Rubinsteinova vyjednávání. Rovnováha našeho modelu nemá dvojí marginalizaci, takže celkový výstup, konečná cena i celkový zisk řetězce je stejný, jako by stanovila vertikálně integrovaná firma. Zisk je navíc mezi obě firmy rozdělen přibližně rovnoměrně. 3) Náš model má jiné implikace pro politiku konkurence.

Citovat

KVASNIČKA, Michal, Rostislav STANĚK and Ondřej KRČÁL. Monopoly Supply Chain Management via Rubinstein Bargaining. In Martin Dlouhý, Veronika Skočdopolová. Proceedings of the 29th International Conference Mathematical Methods in Economics 2011. 1st ed. Prague: University of Economics, Faculty of Informatics and Statistics, 2011, p. 431-436. ISBN 978-80-7431-058-4.

@inproceedings{949936,
   author = {Kvasnička, Michal and Staněk, Rostislav and Krčál, Ondřej},
   address = {Prague},
   booktitle = {Proceedings of the 29th International Conference Mathematical Methods in Economics 2011},
   edition = {1.},
   editor = {Martin Dlouhý, Veronika Skočdopolová},
   keywords = {vertical integration; double markup; Rubinstein bargaining; industrial organization; competition policy},
   howpublished = {tištěná verze "print"},
   language = {eng},
   location = {Prague},
   isbn = {978-80-7431-058-4},
   pages = {431-436},
   publisher = {University of Economics, Faculty of Informatics and Statistics},
   title = {Monopoly Supply Chain Management via Rubinstein Bargaining},
   url = {http://www.econ.muni.cz/~qasar/papers/KvasnickaStanekKrcalMME2011.pdf},
   year = {2011}
}

TY  - JOUR
ID  - 949936
AU  - Kvasnička, Michal - Staněk, Rostislav - Krčál, Ondřej
PY  - 2011
TI  - Monopoly Supply Chain Management via Rubinstein Bargaining
PB  - University of Economics, Faculty of Informatics and Statistics
CY  - Prague
SN  - 9788074310584
KW  - vertical integration
KW  - double markup
KW  - Rubinstein bargaining
KW  - industrial organization
KW  - competition policy
UR  - http://www.econ.muni.cz/~qasar/papers/KvasnickaStanekKrcalMME2011.pdf
N2  - This paper argues that the Spengler’s (JPE, 1950) double-markup story does not capture the strategic situation faced by a monopoly supply chain. We show that 1) the Spengler’s double-markup model is equivalent to an extensive game in which the upstream monopoly has all power to set the intermediate price, and the downstream monopsony has no bargaining power. This assumption seems unrealistic. 2) We model this situation using the Rubinstein bargaining. The equilibrium of our model does not yield a double markup. Hence, the joint output, the consumers price, and the total profit is as high as those of a vertically integrated firm. Moreover, the profit is split roughly equally between the two firms. 3) Our model has different implications for the competition policy.
ER  -

KVASNIČKA, Michal, Rostislav STANĚK and Ondřej KRČÁL. Monopoly Supply Chain Management via Rubinstein Bargaining. In Martin Dlouhý, Veronika Skočdopolová. \textit{Proceedings of the 29th International Conference Mathematical Methods in Economics 2011}. 1st ed. Prague: University of Economics, Faculty of Informatics and Statistics, 2011, p.~431-436. ISBN~978-80-7431-058-4.

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