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Technological Proximity and Exclusive Buyer-Supplier Relationships

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Author Info

  • Milliou Chrysovalantou

    ()
    (Athens University of Economics and Business)

Abstract

This paper provides a new rationale for why some final product manufacturers develop exclusive relationships with their input suppliers, highlighting the role of investment incentives. It shows that exclusivity can encourage firms' investments in tailoring their technologies to their trading partners. This holds both for the buyer's and the supplier's investments. Furthermore, this paper argues against claims that exclusive dealing agreements are detrimental to welfare by demonstrating that their positive impact on efficiency translates into both higher consumers' surplus and total welfare.

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File URL: http://www.degruyter.com/view/j/bejeap.2008.8.1/bejeap.2008.8.1.1680/bejeap.2008.8.1.1680.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 8 (2008)
Issue (Month): 1 (July)
Pages: 1-28

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Handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:25

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Web page: http://www.degruyter.com

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Cited by:
  1. Yongmin Chen & David E. M. Sappington, 2011. "Exclusive Contracts, Innovation, and Welfare," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 194-220, May.

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