Threat of Exit as a Source of Bargaining Power

Abstract

This article analyzes a simple two-period model where two homogenous manufacturers compete to supply a monopolist retailer. We show that, if manufacturers are vulnerable, i.e if they are likely to exit the market in case of insucient orders in the rst period, they may exploit their threat of exit to capture the whole rst period industry prot. Indeed, the retailer will accept to pay the high price to the manufacturers in order to secure upstream competition in the second period. Results are robust under dierent market structures or contract types.

The Influence of Decisional Autonomy on Performance and Strategic Choices - The Case of Subcontracting SMEs in Logging Operations

“…Moreover, as was demonstrated in a study that highlighted the relationship between two producers and a distributor (Bergès & Chambolle, 2009), we note that the distributor is prepared to concede a greater portion of the added value to the producers (i.e. pay a higher price for their products) if he is concerned about one of them going out of business, thereby reducing his number of potential suppliers, which he feels may negatively affect his own future performance.…”

La dépendance commerciale et l’autonomie décisionnelle influencent-elles la performance et les choix stratégiques ?

“…Par ailleurs, dans une recherche sur la relation entre deux producteurs et un distributeur, on a constaté que ce dernier est prêt à concéder une plus grande part de la valeur ajoutée aux producteurs (donc à payer plus cher ses produits) s'il craint que l'un des deux ne déclare faillite, ce qui réduirait son choix d'approvisionnement, une situation qu'il considère comme étant préjudiciable à sa propre performance future (Bergès et Chambolle, 2009). Dans ce contexte, la dépendance commerciale ne serait pas déterminante pour expliquer la performance.…”

Constraints and incentives in the investment regime: How bargaining power shapes BIT reform

“…When a state experiences an improvement in its economic power, its existing agreements need to continue to be favorable in comparison to the new potential alternatives brought by economic improvement. If a state views the terms of the existing BITs as worse than could be achieved through outside options, it develops a credible exit threat -a possibility that unless the terms of cooperation are adjusted to meet its preferences, the dissatisfied party will exit from the agreement (Bergès & Chambolle, 2009;Slapin, 2009). In practice, change in the relative economic power over time between signatory states is effective in creating a credible exit threat, because especially the stronger states are most likely to observe improvement in the weaker states bargaining power when they catch up with them economically.…”