Wholesale Prices Manipulated by Competing Retailers, Hurting Consumers
In a setup where companies compete in different ways to sell products, the wholesale prices they set can vary a lot. When one retailer acts like a strategic player (Cournot), they tend to pay more to buy products from manufacturers. But if the retailer acts more like a bargain-hunter (Bertrand), they end up paying less. This is different from what happens under regular, head-to-head competition at the retail level. In that case, prices are typically lower than the production costs when it's a Cournot game but higher if it's a Bertrand game. So, in a mixed strategy environment where both types of competition exist, wholesale prices reflect these different tactics and can be above or below the actual costs of making the goods.