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Technological Proximity and Exclusive Buyer-Supplier Relationships

Listed author(s):
  • Milliou Chrysovalantou

    ()

    (Athens University of Economics and Business)

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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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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  1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
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  18. Ilya Segal, 1999. "Complexity and Renegotiation: A Foundation for Incomplete Contracts," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 57-82.
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