Exclusive Contracts and Bargaining Power

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.