Abstract
This study constructs a model of anticompetitive exclusive contracts in the presence of complementary inputs. A downstream firm transforms multiple complementary inputs into final products. When complementary input suppliers have market power, upstream competition within a given input market benefits not only the downstream firm, but also the complementary input suppliers, by raising complementary input prices. Thus, the downstream firm is unable to earn higher profits, even when socially efficient entry is allowed. Hence, the inefficient incumbent supplier can deter socially efficient entry by using exclusive contracts, even in the absence of scale economies, downstream competition, and relationship-specific investment.
| Original language | English |
|---|---|
| Pages (from-to) | 145-167 |
| Number of pages | 23 |
| Journal | International Journal of Industrial Organization |
| Volume | 56 |
| DOIs | |
| Publication status | Published - Jan 2018 |
| Externally published | Yes |
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Keywords
- Antitrust policy
- Complementary inputs
- Exclusive dealing
- Multiple inputs
ASJC Scopus subject areas
- Industrial relations
- Aerospace Engineering
- Economics and Econometrics
- Economics, Econometrics and Finance (miscellaneous)
- Strategy and Management
- Industrial and Manufacturing Engineering
Cite this
Exclusive contracts with complementary inputs. / Kitamura, Hiroshi; Matsushima, Noriaki; Sato, Misato.
In: International Journal of Industrial Organization, Vol. 56, 01.2018, p. 145-167.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Exclusive contracts with complementary inputs
AU - Kitamura, Hiroshi
AU - Matsushima, Noriaki
AU - Sato, Misato
PY - 2018/1
Y1 - 2018/1
N2 - This study constructs a model of anticompetitive exclusive contracts in the presence of complementary inputs. A downstream firm transforms multiple complementary inputs into final products. When complementary input suppliers have market power, upstream competition within a given input market benefits not only the downstream firm, but also the complementary input suppliers, by raising complementary input prices. Thus, the downstream firm is unable to earn higher profits, even when socially efficient entry is allowed. Hence, the inefficient incumbent supplier can deter socially efficient entry by using exclusive contracts, even in the absence of scale economies, downstream competition, and relationship-specific investment.
AB - This study constructs a model of anticompetitive exclusive contracts in the presence of complementary inputs. A downstream firm transforms multiple complementary inputs into final products. When complementary input suppliers have market power, upstream competition within a given input market benefits not only the downstream firm, but also the complementary input suppliers, by raising complementary input prices. Thus, the downstream firm is unable to earn higher profits, even when socially efficient entry is allowed. Hence, the inefficient incumbent supplier can deter socially efficient entry by using exclusive contracts, even in the absence of scale economies, downstream competition, and relationship-specific investment.
KW - Antitrust policy
KW - Complementary inputs
KW - Exclusive dealing
KW - Multiple inputs
UR - http://www.scopus.com/inward/record.url?scp=85039155151&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85039155151&partnerID=8YFLogxK
U2 - 10.1016/j.ijindorg.2017.11.005
DO - 10.1016/j.ijindorg.2017.11.005
M3 - Article
AN - SCOPUS:85039155151
VL - 56
SP - 145
EP - 167
JO - International Journal of Industrial Organization
JF - International Journal of Industrial Organization
SN - 0167-7187
ER -