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Contracts as a barrier to entry

Aghion, P.; Bolton, P.; (1987) Contracts as a barrier to entry. American Economic Review , 77 (3) pp. 388-401.

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It is shown that an incumbent seller who faces a threat of entry into his or her market will sign long-term contracts that prevent the entry of some lower-cost producers even though they do not preclude entry completely. Moreover, when a seller possesses superior information about the likelihood of entry, it is shown that the length of the contract may act as a signal of the true probability of entry.

Type: Article
Title: Contracts as a barrier to entry
Publisher version: http://www.aeaweb.org/aer/contents/index.php
Language: English
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/17655
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