Threat of exit as a source of bargaining power[Risque de faillite et pouvoir de marché]

This article analyzes a simple two-period model where two homogenous manufacturers compete to supply a monopolist retailer. The authors show that if manufacturers are vulnerable (i.e if they are likely to exit the market in case of insufficient orders in the first period), they may exploit their threat of exit to capture the whole first period industry profit. Indeed, the retailer will accept to pay the high price to the manufacturers in order to secure upstream competition in the second period. Results are robust under different market structures or contract types.