This means that manufacturer can choose whether he wants the retailer to be a competition market or to be oligopoly or etc. In the view of manufacturers, they want those retailers market to be competitive. Why? Because they treat retailers as their demand. The more the retailers, the more the demand for manufacturers companies. When firm has more demand, meaning that it has more revenue. The manufacturers could control whether how they want the retailers to do. It is like the chain company. Retailers who want to sell cars have to pay for the permission to sell from the specific car company. This could be considered as the barrier to entry. However, the demand for being car retailers is big enough that could make the retailers market be a competition market. .
In the automobile industry, there is no worry about price discrimination among manufacturers and retailers but there is price discrimination between consumers and retailers. If the manufacturer decides to start its own retailer and set the lower price than other retailers, all retailers will leave the market. This means that the demand of manufacturers product will drastically decrease and cannot earn as high profit as without price discrimination. For consumers and retailers, all retailers have the same marginal cost and the market is perfect competition market. By theory the price should be set equal to the marginal cost. However, in the real world, consumers face search cost and asymmetric information. There is a experiment from Chicago called Are the Disabled Discriminated Against in Product Markets? The Evidence is collected from Field Experiments. They sent handicapped person and normal person to ask for a price of a car in a few car showrooms. The result is that handicapped person got a higher price of car than the normal person. However, they sent the same people to another few car showrooms, but this time the handicapped person say something more "I want to know the price of this car and I will go to compare with other showrooms".
