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Exclusive Contracts and Bargaining Power

Author

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  • Hiroshi Kitamura
  • Noriaki Matsushima
  • Misato Sato

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-one-supplier framework in the Chicago School critique, we show a possibility that an inefficient incumbent supplier can deter a socially efficient entry through exclusive contracts.

Suggested Citation

  • Hiroshi Kitamura & Noriaki Matsushima & Misato Sato, 2016. "Exclusive Contracts and Bargaining Power," ISER Discussion Paper 0978, Institute of Social and Economic Research, Osaka University.
  • Handle: RePEc:dpr:wpaper:0978
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    File URL: http://www.iser.osaka-u.ac.jp/library/dp/2016/DP0978.pdf
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    References listed on IDEAS

    as
    1. Abito, Jose Miguel & Wright, Julian, 2008. "Exclusive dealing with imperfect downstream competition," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 227-246, January.
    2. Rey, Patrick & Tirole, Jean, 2007. "A Primer on Foreclosure," Handbook of Industrial Organization, Elsevier.
    3. Yong, Jong-Say, 1996. "Excluding Capacity-Constrained Entrants through Exclusive Dealing: Theory and an Application to Ocean Shipping," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 115-129, June.
    4. John Simpson & Abraham L. Wickelgren, 2007. "Naked Exclusion, Efficient Breach, and Downstream Competition," American Economic Review, American Economic Association, vol. 97(4), pages 1305-1320, September.
    5. Joseph Farrell, 2005. "Deconstructing Chicago on Exclusive Dealing," Industrial Organization 0504017, EconWPA.
    6. Michael D. Whinston & Ilya R. Segal, 2000. "Naked Exclusion: Comment," American Economic Review, American Economic Association, vol. 90(1), pages 296-309, March.
    7. Chiara Fumagalli & Massimo Motta & Lars Persson, 2009. "ON THE ANTICOMPETITIVE EFFECT OF EXCLUSIVE DEALING WHEN ENTRY BY MERGER IS POSSIBLE -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 57(4), pages 785-811, December.
    8. Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
    9. Rasmusen, Eric B & Ramseyer, J Mark & Wiley, John S, Jr, 1991. "Naked Exclusion," American Economic Review, American Economic Association, vol. 81(5), pages 1137-1145, December.
    10. Chiara Fumagalli & Massimo Motta & Thomas Rønde, 2012. "Exclusive Dealing: Investment Promotion May Facilitate Inefficient Foreclosure," Journal of Industrial Economics, Wiley Blackwell, vol. 60(4), pages 599-608, December.
    11. Aghadadashli, Hamid & Dertwinkel-Kalt, Markus & Wey, Christian, 2016. "The Nash bargaining solution in vertical relations with linear input prices," Economics Letters, Elsevier, vol. 145(C), pages 291-294.
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    Citations

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    Cited by:

    1. Kitamura, Hiroshi & Matsushima, Noriaki & Sato, Misato, 2018. "Exclusive contracts with complementary inputs," International Journal of Industrial Organization, Elsevier, vol. 56(C), pages 145-167.
    2. Lee, Sang-Ho & Matsumura, Toshihiro & Park, Chul-Hi, 2017. "Procurement of Advanced Technology and Welfare-Reducing Vertical Integration," MPRA Paper 79109, University Library of Munich, Germany.
    3. Hiroshi Kitamura & Noriaki Matsushima & Misato Sato, 2018. "Naked exclusion under exclusive-offer competition," ISER Discussion Paper 1021, Institute of Social and Economic Research, Osaka University.

    More about this item

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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