Defending home against giants: Exclusive dealing as a survival strategy for local firms

Arbeitspapier

We consider exclusive contracts as a survival strategy for a local incumbent manufacturer facing a multinational manufacturer's entry. Although both manufacturers prefer to trade with an efficient local distributor, trading with inefficient competitive distributors is acceptable only to the entrant, owing to the entrant's efficiency. Hence, such competitive distributors can be an outside option for the entrant. As the entrant becomes efficient, the outside option works effectively, implying that the entry does not considerably benefit the efficient local distributor. Thus, the local manufacturer is more likely to sign an exclusive contract with the efficient distributor as the entrant becomes efficient.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 1122

Classification and Topics

• Classification: Wirtschaft ; International Investment; Long-term Capital Movements ; Multinational Firms; International Business ; Monopoly; Monopolization Strategies ; Vertical Restraints; Resale Price Maintenance; Quantity Discounts
• Subject: Multinational firms ; Exclusive dealing ; Vertical relation ; Market protection

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kitamura, Hiroshi ; Matsushima, Noriaki ; Sato, Misato
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/234934
• Last update: 10.03.2025, 11:42 AM CET