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Upstream Monopoly and Downstream Information Sharing

Discussion Papers 1635, 25 S.

Pio Baake, Andreas Harasser


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We analyze a vertical structure with an upstream monopoly and two downstream retailers. Demand is uncertain but each retailer receives an informative private signal about the state of the demand. We construct an incentive compatible and ex ante balanced mechanism which induces the retailers to share their information truthfully. Information sharing can be profitable for the retailers but is likely to be detrimental for social welfare.

Pio Baake

Research Director Regulation in the Firms and Markets Department

JEL-Classification: D82;L13;L14
Keywords: information sharing, upstream monopoly, vertical relations
Frei zugängliche Version: (econstor)