How Does Downstream Firms' Efficiency Affect Exclusive Supply Agreements?

Hiroshi Kitamura, Noriaki Matsushima and Misato Sato

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: This study constructs a model for examining anticompetitive exclusive supply contracts that prevent an upstream supplier from selling input to a new downstream firm. With regard to the technology to transform the input produced by the supplier, as an entrant becomes increasingly efficient, its input demand can decrease, and thus, the supplier earns smaller profits when socially efficient entry is allowed. Hence, the inefficient incumbent can deter socially efficient entry via exclusive supply contracts, even in the framework of the Chicago School argument where a single seller, a single buyer, and a single entrant exist.

Date: 2013-08
New Economics Papers: this item is included in nep-bec, nep-com and nep-spo
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Citations: View citations in EconPapers (3)

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https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2013/DP0878.pdf

Related works:
Journal Article: How Does Downstream Firms’ Efficiency Affect Exclusive Supply Agreements? (2024)
Working Paper: How Does Downstream Firms' Efficiency Affect Exclusive Supply Agreements? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:0878

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