Imperial College London


Business School

Head of the Department of Economics and Public Policy



+44 (0)20 7594 9215t.valletti Website CV




417City and Guilds BuildingSouth Kensington Campus






BibTex format

author = {Iozzi, A and Valletti, T},
doi = {10.1257/mic.6.3.106},
journal = {American Economic Journal: Microeconomics},
pages = {106--135},
title = {Vertical contracting and countervailing power},
url = {},
volume = {6},
year = {2014}

RIS format (EndNote, RefMan)

AB - We study a set of bilateral Nash bargaining problems between an upstream input supplier and several differentiated but competing retailers. If one bilateral bargain fails, the supplier can sell to the other retailers. We show that, in a disagreement, the other retailers' behavior has a dramatic impact on the supplier's outside options and, therefore, on input prices and welfare. We revisit the countervailing buyer power hypothesis and obtain results in stark contrast with previous findings, depending on the type of outside option. Our results apply, more generally, to the literature that incorporates negotiated input prices using bilateral Nash bargaining.
AU - Iozzi,A
AU - Valletti,T
DO - 10.1257/mic.6.3.106
EP - 135
PY - 2014///
SN - 1945-7669
SP - 106
TI - Vertical contracting and countervailing power
T2 - American Economic Journal: Microeconomics
UR -
UR -
UR -
UR -
VL - 6
ER -