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Incentive to encourage downstream competition under bilateral oligopoly

By Stephane Caprice

Abstract

Consider the contracting problem of an input supplier dealing with several firms that compete in an output market. We show that, contrary to the key result of the previous literature, an input supplier's profit can increase with the number of downstream firms if the upstream firm is not a monopolist but instead competes with an alternative inferior supplier.bilateral oligopoly

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Citations

  1. (2005). A primer of foreclosure”
  2. (2004). Bilateral control with vertical contract” forthcoming RAND
  3. (2003). Downstream competition, foreclosure, and vertical integration”
  4. (1994). Opportunism in multilateral vertical contracting: nondiscrimination, exclusivity and uniformity”
  5. (2003). Robust predictions for bilateral contracting with externalities”
  6. (1995). The non-existence of pairwise-proof equilibrium”
  7. (1990). Vertical integration and market foreclosure”

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