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

21 Pages Posted: 24 Aug 2017  

Liyang Hou

Shanghai Jiao Tong University (SJTU) - KoGuan Law School

Date Written: August 22, 2017

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

Suggested Citation

Hou, Liyang, Superior Bargaining Power: The Good, the Bad and the Ugly (August 22, 2017). Available at SSRN: https://ssrn.com/abstract=3024015

Liyang Hou (Contact Author)

Shanghai Jiao Tong University (SJTU) - KoGuan Law School ( email )

Huashan Road 1954
Xuhui District
Shanghai, Shanghai 200030
China
+86-21-6293-4632 (Phone)

HOME PAGE: http://law.sjtu.edu.cn/TeacherDetail123.aspx

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