Authors
Philippe Aghion, Patrick Bolton
Publication date
1987/6/1
Journal
The American economic review
Pages
388-401
Publisher
The American Economic Association
Description
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.
Total citations
Scholar articles
P Aghion, P Bolton - The American economic review, 1987