Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/234934
Authors: 
Kitamura, Hiroshi
Matsushima, Noriaki
Sato, Misato
Year of Publication: 
2021
Series/Report no.: 
ISER Discussion Paper No. 1122
Abstract: 
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.
Subjects: 
Multinational firms
Exclusive dealing
Vertical relation
Market protection
JEL: 
F21
F23
L12
L42
Document Type: 
Working Paper

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