|Salle C 108, Université Paris-Dauphine|
"The welfare effects of category captaincy" Co-authored with Clémence Christin (Université de Caen).
We investigate the welfare consequences of the choice of a category captain by a retailer, who can select one of his two suppliers to provide services that may boost demand either for the captain's product only (vertical practice) or for both products (horizontal practice). The welfare effects of the vertical practice depend on the timing of the decisions. When the tariff offers are made after the choice of the category captain and once the effort is exerted, the retailer always selects a category captain: consumer surplus and welfare increase, but the rival's profit decreases; furthermore, the retailer may choose the less efficient supplier to enjoy a larger share of a smaller joint profit, thus failing to maximize welfare (second-best situation). When, by contrast, the effort is chosen after the tariff stage, then tariffs are inefficient and welfare may even be lower with a category captain than without one. We extend these results with spillovers (horizontal practice) and balanced bargaining power.
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