A BEJEAP Advances article.

Abstract

This paper provides a new rationale for why some final product manufacturers develop exclusive relationships with their input suppliers, highlighting the role of investment incentives. It shows that exclusivity can encourage firms' investments in tailoring their technologies to their trading partners. This holds both for the buyer's and the supplier's investments. Furthermore, this paper argues against claims that exclusive dealing agreements are detrimental to welfare by demonstrating that their positive impact on efficiency translates into both higher consumers' surplus and total welfare.

Submitted: October 10, 2006 · Accepted: July 16, 2008 · Published: July 30, 2008

Recommended Citation

Milliou, Chrysovalantou (2008) "Technological Proximity and Exclusive Buyer-Supplier Relationships," The B.E. Journal of Economic Analysis & Policy: Vol. 8 : Iss. 1 (Advances), Article 25.
DOI: 10.2202/1935-1682.1680
Available at: http://www.bepress.com/bejeap/vol8/iss1/art25