The Strategic Value of Quantity Forcing Contracts

B-Tier
Journal: American Economic Journal: Microeconomics
Year: 2010
Volume: 2
Issue: 1
Pages: 204-29

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We explore the strategic value of quantity forcing contracts in a manufacturer-retailer environment under both adverse selection and moral hazard. Manufacturers dealing with (exclusive) competing retailers may prefer to leave contracts silent on retail prices, whenever other aspects of the retailers' activity remain nonverifiable. Two effects are at play when moving from retail price maintenance to quantity forcing. First, restricting screening possibilities may increase retailers' rent. Second, such a restriction affects downstream competition. This latter effect may justify using quantity forcing contracts and, more generally, shed light on a novel source of contractual incompleteness. (JEL D82, D86, L14)

Technical Details

RePEc Handle
repec:aea:aejmic:v:2:y:2010:i:1:p:204-29
Journal Field
General
Author Count
2
Added to Database
2026-01-25