 Contract contingency in vertically related marketsEmanuele Bacchiega, Olivier Bonroy and Emmanuel Petrakis Post-Print from HAL Abstract: Over the last years, courts are increasingly inclined to consider pre-contractual arrangements as binding contracts, endowing them with commitment value that can be used strategically by the party that proposes them. We study the optimal pre-contractual arrangement offers of an upstream monopolist producing an essential input that may sell to two vertically differentiated downstream firms. These arrangements concern the exclusivity and the contingency of the contracts to be signed. Once the pre-contractual arrangements have been determined, the terms of the contracts are negotiated between the upstream supplier and the downstream firm(s). The distribution of bargaining power during the contract terms negotiations is the main driving force of the monopolist's choices. A powerful supplier always opts for an exclusive contract. By contrast, a weaker supplier offers non exclusive contracts and makes each of them contingent or non-contingent such as to guarantee the most favorable outside option in its negotiations. Keywords: exclusive vs. non-exclusive relationships; product differentiation; two-part tariff; contract contingency; Vertical relationships (search for similar items in EconPapers) Published in Journal of Economics and Management Strategy, 2018, 27 (4 - Winter), pp.772-791. ⟨10.1111/jems.12252⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01767805 DOI: 10.1111/jems.12252 Access Statistics for this paper More papers in Post-Print from HAL |
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