Year: 2026
Type: article
Abstract: This paper develops a game-theoretic model to study how exclusionary contracts affect firms’ incentives to invest in innovation. Several symmetric sellers compete to supply an identical product to a set of buyers, and each seller can invest in R&D to develop a higher-quality version of the product. Prior to choosing their R&D investments, sellers may offer exclusionary contracts to buyers. In equilibrium, all buyers sign an exclusionary contract with the same seller, which eliminates rival sellers’ incentives to invest in R&D and concentrates innovative effort in a single firm. Banning exclusionary contracts increases the aggregate probability of innovation and the joint surplus of buyers and sellers only when the R&D technology exhibits sufficiently strong diseconomies of scale.
Source: Games
DOI: 10.3390/g17010008
Author: Simen Aardal Ulsaker
Institution: OsloMet – Oslo Metropolitan University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,930
OpenAlex ID: W7127312697