Abstract
It is shown that an incumbent seller who faces a threat of entry into his or her market will sign long-tern 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.
Full Citation
American Economic Review
vol.
77
,
(June 01, 1987):
388
-401
.