Foros, Øystein; Hagen, Kåre P.; Kind, Hans Jarle - In: Management Science 55 (2009) 8, pp. 1280-1291
We show how an upstream firm, by using a price-dependent profit-sharing rule, can prevent destructive competition between downstream firms that produce relatively close substitutes. With this rule, the upstream firm induces the retailers to behave as if demand has become less price elastic. As a...