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Paying not to sell

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Dipartimento di Scienze economiche DSE
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Keywords
  • Secs-P/01 Economia Politica

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.

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