Paying Not to Sell

Quaderni DSE Working Paper N° 870

10 Pages Posted: 14 Feb 2013

See all articles by Emanuele Bacchiega

Emanuele Bacchiega

University of Bologna - Department of Economics

Olivier Bonroy

French National Institute for Agricultural Research (INRA) - Grenoble Applied Economic Laboratory; University of Grenoble

Rania Mabrouk

French National Institute for Agricultural Research (INRA) - Grenoble Applied Economic Laboratory

Date Written: February 13, 2013

Abstract

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 di erentiation, vertical relationships

JEL Classification: L12, L13, L14

Suggested Citation

Bacchiega, Emanuele and Bonroy, Olivier and Mabrouk, Rania, Paying Not to Sell (February 13, 2013). Quaderni DSE Working Paper N° 870. Available at SSRN: https://ssrn.com/abstract=2217626 or http://dx.doi.org/10.2139/ssrn.2217626

Emanuele Bacchiega (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
40126 Bologna, 40125
Italy
+390512098486 (Phone)
+390512098493 (Fax)

Olivier Bonroy

French National Institute for Agricultural Research (INRA) - Grenoble Applied Economic Laboratory ( email )

BP47
38040 Grenoble Cedex
France

University of Grenoble ( email )

Grenoble
France

Rania Mabrouk

French National Institute for Agricultural Research (INRA) - Grenoble Applied Economic Laboratory ( email )

BP47
38040 Grenoble Cedex
France

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