Abstract
The article illustrates how a seller profitably can prevent entry of a potential competitor, even when entry would increase industry profit. Entry is prevented by offering exclusive contracts to the buyers. The buyers are assumed to be differentiated firms, competing in a downstream market. Exclusion occurs in equilibrium as long as there is some degree of competition among the downstream firms, and even when there are no economies of scale in upstream production.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have