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Title: Sole Distributors and Incentives to Innovate
Authors: Flath, David
Nariu, Tatsuhiko
Keywords: innovation
sole distributor
Issue Date: 2015
Publisher: Graduate School of Economics, Kyoto University
Journal title: The Kyoto Economic Review
Volume: 84
Issue: 1-2
Start page: 74
End page: 93
Abstract: An independent firm that is the sole distributor of an upstream monopoly supplier has a stronger incentive to discover and adopt cost-reducing innovations than would a competitive distribution industry bound to the same upstream supplier. This is true whether the downstream pricing behavior is of a Cournot or Bertrand variety, and whether the distributors' rights to innovations are exclusive or may be costlessly imitated. This represents a new effi ciency-based explanation for the manufacturer's assignment of exclusive geographic territories to distributors. It can explain why a foreign manufacturer would designate a sole importer to be uniquely responsible for wholesale distribution of its product within the importing country.
DOI: 10.11179/ker.84.74
Appears in Collections:Vol.84 No.1-2

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