Partial Ownership Deals Give Retailers Unfair Pricing Advantage Over Consumers
The research delves into why companies sometimes only partly join forces with retailers, examining when manufacturers own part of the retail business. They found that this 'partial vertical integration' can lead to higher prices but softer competition, balancing between profit and the costs of asymmetric information. Essentially, when manufacturers and retailers team up partially, they might raise prices strategically to avoid fierce competition, yet this move also comes with some drawbacks due to information differences. Overall, it's a strategic game between controlling competition levels and handling the challenges of not fully aligning goals.