Exclusive contracts and bargaining power

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 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-onesupplier framework in the Chicago School critique, we show a possibility that an inefficient incumbent supplier can deter a socially efficient entry through exclusive contracts. Terms of use: Documents in EconStor mayJEL classifications code: L12, L41, L42, C72.

Defending Home against Giants: Exclusive Dealing as a Survival Strategy for Local Firms*

“…10 The model in this study shares some parts of equilibrium properties with those in the studies that modify the competitiveness of the upstream market in a three-player model with two suppliers and one buyer. 11 Those studies show that anticompetitive exclusive dealing is attainable in the cases where the entrant is capacity constrained (Yong [1996]), where upstream firms competeà la Cournot (Farrell [2005]), where upstream firms can merge (Fumagalli et al [2009]), and where the downstream buyer bargains with supplier sequentially (Kitamura et al [2017]). The key feature of those studies is that the buyer does not benefit enough from the mild upstream competition, allowing the incumbent supplier to offer an acceptable exclusive contract to the buyer.…”

“…[2009]), and where the downstream buyer bargains with supplier sequentially (Kitamura et al . [2017]). The key feature of those studies is that the buyer does not benefit enough from the mild upstream competition, allowing the incumbent supplier to offer an acceptable exclusive contract to the buyer.The source of such an insufficient benefit in those studies (milder upstream competition) differs from ours (the entrant's rent extraction in negotiation), although the buyer's insufficient benefit from entry is similar to ours.Concretely, alternative distribution channels are beyond the scope of these studies; the contribution of this study to the existing literature is to introduce an alternative exclusion mechanism such that naked exclusion is attainable if we consider the efficient entrant's outside option.…”

Corporate social responsibility: The implications of cost improvement and promotion effort

“…Based on the Nash bargaining framework (Aghadadashli, Dertwinkel‐Kalt, & Wey, ; Basak, ; Feng & Lu, ; Kitamura, Matsushima, & Sato, ), the optimization problem for the CSR level in Stage 1 can be formulated as follows: …”

Which is better for durable goods producers, exclusive or open supply chain?

“…1818See also Kitamura et al (2017), who show that anticompetitive exclusive dealing can occur if the downstream buyer bargains with suppliers sequentially.…”

“…For another mechanism of anticompetitive exclusive dealing, seeFumagalli and Motta (2012), who focus on the incumbent's relationship-specific investments. See alsoKitamura et al (2018), who focus on a complementary input supplier with market power.18 See alsoKitamura et al (2017), who show that anticompetitive exclusive dealing can occur if the downstream buyer bargains with suppliers sequentially.19 In the Supporting Information Appendix, we introduce the analysis under linear demand in which F v v ( ) = to check various situations such as linear wholesale pricing and vertical product differentiation.20 Alternatively, we can consider the setting in which v represents a value of per-period use; the surplus of consumer type v is δ v p (1 + ) − 1 for the purchase in period 1, while it is δ v p ( − ) 2 for the purchase in period 2. In the Supporting Information Appendix, we explore such a setting under linear demand and derive exclusion results.21 In Section 4.4, we extend the model to the case in which the difference in the efficiency is too large and no consumer purchases the final good in period 1 when U E 's entry is anticipated.22 This assumption simplifies the analysis.…”