 Most-Favored Treatment Provisions as Nondiscrimination GuaranteesDavid Butz International Journal of the Economics of Business, 1995, vol. 2, issue 1, 65-86 Abstract: A firm employs suppliers who make specific investments. Because output demand is uncertain and the cost of enumerating contingencies high, the firm retains some unilateral control over the input quantities it purchases. To allay suppliers' concerns over potential opportunism the firm must commit not to pit them against one another ex post by threatening to buy less from those who refuse to discount their prices. By extending most-favored treatment guarantees the firm commits not to discriminate. In some circumstances this generates efficient and opportunism-free outcomes. In others it is less effective but may remain attractive relative to other options. Evidence from field market contracts for natural gas corroborates this nondiscrimination hypothesis. Keywords: Natural gas; Most-favored treatment provisions; Opportunism; Vertical contracts, JEL classifications: L14, (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:ijecbs:v:2:y:1995:i:1:p:65-86 Ordering information: This journal article can be ordered from DOI: 10.1080/758521097 Access Statistics for this article International Journal of the Economics of Business is currently edited by Eleanor Morgan More articles in International Journal of the Economics of Business from Taylor & Francis Journals |
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