Nikolay Shvets

Georgy Kolesnik

One of the instruments of market competition regulation is the formation of a hierarchical structure of producers by providing some of them with the preferential terms of business. In addition to changes in market prices, the sale of privileges to producers allows consumer to extract additional income. The authors study the impact of the privileges in the form of long-term agreements on the market equilibrium and consumer surplus. It is shown that long-term agreements are effective for consumer at the markets with а small number of participants. The infl uence of transaction costs on the optimal market contracting structure is analyzed.