Threat of Exit as a Source of Bargaining Power
Fabian Bergès and
Claire Chambolle ()
Recherches économiques de Louvain, 2009, vol. 75, issue 3, 353-368
This article analyzes a simple two-period model where two homogenous manufacturers compete to supply a monopolist retailer. We show that if manufacturers are vulnerable (i.e if they are likely to exit the market in case of insufficient orders in the first period), they may exploit their threat of exit to capture the whole first period industry profit. Indeed, the retailer will accept to pay the high price to the manufacturers in order to secure upstream competition in the second period. Results are robust under different market structures or contract types. JEL Classification ? L14, D21, Q12.
Keywords: bargaining power; market entry; vertical contract (search for similar items in EconPapers)
JEL-codes: D21 L14 Q12 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.cairn.info/revue-recherches-economiques ... -2009-3-page-353.htm (text/html)
Working Paper: Threat of Exit as a Source of Bargaining Power (2009)
Working Paper: Threat of exit as a source of bargaining power (2009)
Working Paper: Threat of Exit as a Source of Bargaining Power (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cai:reldbu:rel_753_0353
Access Statistics for this article
More articles in Recherches économiques de Louvain from De Boeck Université
Bibliographic data for series maintained by Jean-Baptiste de Vathaire ().