Equilibrium Configurations of Distribution Channels in Bilaterally Oligopolistic Industries

The paper develops a model in which two manufacturers bid for representation by each of two available retailers who then choose noncooperatively which manufacturer's bid, if any, to accept. This framework allows for interlocking relationships : each manufacturer can employ both retailers and conversely each retailer can represent both manufacturers. In contrast to the extant literature, which does not provide a classificatory characterization of equilibria in such a setting, the present paper establishes necessary and sufficient conditions for every distribution configuration to arise in equilibrium. The analysis is performed for different cases, namely, when bids are fully contingent and completely unconstrained and when they are subject to various constraints. In each case the paper identifies the conditions under which the most efficient configuration can be implemented as an equilibrium