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| Author: | Ioannou, I. Mortimer, J.H. Mortimer, R. |
| Title: | The effects of capacity on sales under alternative vertical contracts |
| Journal: | Journal of Industrial Economics
2011 : MAR, VOL. 59:1, p. 117-154 |
| Index terms: | video industry rental trade sales decision making retailing purchasing contracts USA |
| Language: | eng |
| Abstract: | Retailer capacity decisions may affect sales for products via, for example, availability and visibility. Utilizing data from the United States (U.S.) video rental industry, estimates of the effect of capacity on sales are reported under various vertical contracts. New monitoring technologies eased new supply contracts in the industry, reducing upfront costs of capacity but having a prerequisite of minimum capacity purchases, powerfully impacting stocking decisions. Larger capacity (more tapes) for a given title is possibly found to substantially increase rentals of the title. Also alternative vertical contractual forms for distributing tapes from studios to retailers is found to strongly affect the relationship between capacity and rentals. |
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