Paying Not to Sell
Quaderni DSE Working Paper N° 870
10 Pages Posted: 14 Feb 2013
Date Written: February 13, 2013
In this paper we show that, in the presence of buyer and seller power, a monopolist can enter into a costly contractual relationship with a low-quality supplier with the sole intention of improving its bargaining position relative to a high-quality supplier, without ever selling the good produced by that firm.
Keywords: Monopoly, vertical product dierentiation, vertical relationships
JEL Classification: L12, L13, L14
Suggested Citation: Suggested Citation