Vertical agreements refer to agreements between two or more firms at different levels of the supply chain, such as a manufacturer and a distributor. These agreements are typically aimed at enhancing efficiency, improving quality, and reducing costs. However, vertical agreements can also be used to restrict competition and limit consumer choice.

There are various types of vertical agreements, including:

1. Exclusive dealing: This occurs when a supplier requires a buyer to purchase all or most of its products exclusively from the supplier. Exclusive dealing can lead to increased sales for the supplier, but it can also limit competition and increase prices.

2. Resale price maintenance: This occurs when a supplier sets a minimum resale price for its products that its distributors or retailers must adhere to. This can help maintain product quality and prevent price erosion, but it can also limit price competition and raise consumer prices.

3. Territorial restrictions: This occurs when a supplier limits the geographic area in which a distributor or retailer can sell its products. This can be used to prevent price competition and maintain market power, but it can also reduce consumer choice and increase prices.

4. Franchising: This occurs when a franchisor licenses its business model and trademarks to a franchisee in exchange for a fee. Franchising can help expand a brand and achieve economies of scale, but it can also restrict competition and limit consumer choice.

5. Dual distribution: This occurs when a supplier sells its products through its own distribution channels as well as through independent distributors or retailers. Dual distribution can help reach more customers and provide additional sales channels, but it can also create conflicts of interest and limit competition.

Vertical agreements can have both positive and negative effects on competition and consumers. While they can help increase efficiency and improve quality, they can also limit competition and reduce consumer choice. It is important for firms to carefully consider the potential impacts of their vertical agreements and comply with antitrust laws to ensure a competitive marketplace.