By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.
We analyze oligopolistic competition in which firms use contracts contingent
on what buyers purchase from their rivals. We present a new mechanism
through which a dominant firm, by using these contracts, can gain more from
exploiting its rivals than from foreclosing them. This exploitation is achieved
by requiring buyers to source at least a certain share of their total requirements
from the dominant firm, though less than 100%. By optimally designing these
contracts, the dominant firm can earn as much as it would if it were to acquire
the rivals’ specific technological and marketing capabilities at no cost.
