Question:
Why might a firm be interested in not supplying an item to some firms in the value chain?
Author: Hjalmer PedersenAnswer:
Foreclosure: 'Upstream‘ firm refuses to provide essential items to (some) firms 'downstream' Motives for the refusal to supply: • (More) market power in the downstream market • Signal quality by sales from a few retailers • Less intra-brand and perhaps inter-brand competition for the company's product • Achieve higher prices • Increasing costs for competitors in the downstream market • If the product can not easily be replaced, the dealers pay extra to obtain • substitute products
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