Three essays on vertical restraints in international trade

The three essays of the thesis focus on aspects of contract theory applied to international trade issues. The thesis has two main goals: to investigate the choice of vertical restraints by manufacturers in an open economy context and, along with the use of vertical restraints, to investigate manufacturer's incentive to deal with unauthorized imports, more commonly known as parallel imports.; The study of these topics is important for several reasons. First, the international distribution of products through intermediaries (wholesales or retailers) is widespread. Still, international trade has very little to say about this issue since models typically assume that a producer sells directly to consumers. Hence, we have very little knowledge about the types of vertical restraints imposed by manufacturers and how trade policy may affect their choice. Second, cases involving parallel imports are numerous on both sides of the Atlantic and, for some products, the market shares held by parallel imports are rumored to be very high. Yet the literature has very little to contribute to our understanding of this phenomenon.; In the first chapter we develop a model of parallel imports where a foreign monopoly sells its product in two countries through retailers with exclusive territory contracts (ET) or through competitive retailers (No ET).; The second chapter examines a three-stage game where two risk neutral manufacturers, a foreign and a domestic one, sell differentiated products through risk-averse retailers located in a single market. The manufacturers choose whether to offer exclusive territory contracts (ET) to their retailers or let many retailers distribute their product (No ET). We then investigate how different country size reflected by the position of the demand curves for the two products affects this choice of contract.; In the third chapter we use the same model as in the previous chapter but we add a second country. The manufacturers take advantage of country differences by using ordinary (third-degree) price discrimination and by adopting ET or No ET contracts specifically designed for each country. We first investigate the nature of contracts in each market when parallel imports are illegal. Next, assuming that parallel imports are legal, we investigate the type and terms of contracts that manufacturers would adopt to prevent them. (Abstract shortened by UMI.)...