2007/09/01 by Leslie M. Marx, Greg Shaffer
Business, Management and Accounting · Economics, Econometrics and Finance · #Consumer Market Behavior and Pricing #Digital Platforms and Economics #Merger and Competition Analysis
paper · doi:10.1111/j.0741-6261.2007.00114.x
openalex publication_date 2007/09/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/22
Although upfront payments are often observed in contracts between manufacturers and retailers, little is known about their competitive effects or the role retailers play in securing them. In this article, we consider a model in which two competing retailers make take‐it‐or‐leave‐it offers to a common manufacturer. We find that upfront payments are a feature of equilibrium contracts, and in all equilibria, only one retailer buys from the manufacturer. These findings support the claims of small manufacturers who argue that they are often unable to obtain widespread distribution for their products because of upfront payments.