Exploiting Rivals' Strengths
Abstract
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 percent. 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. (JEL D43, D82, D86, K21, L14, M31)
Fields of Study & Subjects
Merger and Competition Analysis
Digital Platforms and Economics
Global trade and economics
Publication details
- Journal / source
- American Economic Journal Microeconomics
- Volume
- 18
- Issue
- 3
- Pages
- 77–104
- Publication date
- 29 July 2026
- Language
- EN