Superior Bargaining Power: The Good, the Bad and the Ugly

Abstract

Superior bargaining power demonstrates a domain where practice precedes theory. Although there have been legal practice on superior bargaining power to some extent across the globe for more than eight decades, debates have never rested on whether and how superior bargaining power should be regulated. In view of such a gap, this article for the first time introduces the incomplete contract theory into the legal framework of abusing superior bargaining power. The incomplete contract theory establishes the efficiency loss of abusing superior bargaining power as the underinvestment possibility of the weak party due to the opportunism of the strong party by taking advantage of relationship-specific investment a long-term contract. Subsequently, the article re-interprets the legal conditions for assessing abusing superior bargaining power, i.e. economic dependency, abusive conduct and anti-competitive harm, justifications and sanctions.

Keywords: Superior Bargaining Power, Incomplete Contracts, Economic Dependency