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Technological Proximity and Exclusive Buyer-Supplier Relationships

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  • 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.

Suggested Citation

  • Milliou Chrysovalantou, 2008. "Technological Proximity and Exclusive Buyer-Supplier Relationships," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-28, July.
  • Handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:25
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    References listed on IDEAS

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    Cited by:

    1. Salazar Idana & Galve Górriz Carmen, 2011. "Determinants of the Differences in the Downstream Vertical Integration and Efficiency Implications in Agricultural Cooperatives," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-26, February.
    2. 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.
    3. Hiroshi Kitamura & Akira Miyaoka & Misato Sato, 2016. "Relationship-specific investment as a barrier to entry," Journal of Economics, Springer, vol. 119(1), pages 17-45, September.

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