EQUILIBRIUM RETAIL DISTRIBUTION-SYSTEMS

I analyze producers' choices of optimal distribution systems in a sett ing with two producers of differentiated products and two identical re tailers. Producers may choose to have a single common retailer or one exclusive retailer each. In an infinite horizon model the producers in itially pick a distribution system, and once this decision is made pro ducers must incur a waiting cost to change. The main finding is that a common distribution system can be sustained if waiting costs are low enough, and welfare is reduced as compared with when producers have ex clusive dealers. (C) 1997 Elsevier Science B.V.