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Exclusive Contracts and Bargaining Power

 |  September 12, 2016

Posted by Social Science Research Network

Exclusive Contracts and Bargaining Power

Hiroshi Kitamura (Kyoto Sangyo University), Noriaki Matsushima (Osaka University) & Misato Sato (George Washington University)

Abstract:      This study constructs a simplest model to examine anticompetitive exclusive contracts that prevent a downstream buyer from buying input from a new upstream supplier. Incorporating Nash bargaining into the standard one-buyer-one-supplier framework in the Chicago School critique, we show a possibility that an inefficient incumbent supplier can deter a socially efficient entry through exclusive contracts.