KDI JEP Efficiency Effects of Regulations on Unfair Subcontracting Behaviors August 31, 2025
August 31, 2025
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Yong Hyeon Yang
프로필
This paper investigates the efficiency effects of governing vertical relationships by analyzing the incentives of firms to engage in exclusive contracts. In particular, the analysis focuses on the subcontracting context. When a downstream firm possesses a superior bargaining position, upstream subcontractors do not prefer an exclusive contract, even when it is efficient, as such a contract lowers their bargaining power even further, ultimately leading to lower profits. It can therefore enhance efficiency to encourage upstream firms to engage in an exclusive contract by limiting bargaining power abuses by superior downstream firms. The paper discusses the required flexibility of such a regulation as well as the evaluation of the current regulation based on the analysis.
- Contents
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I. Introduction
II. Exclusive Dealing
III. Theoretical Analysis
IV. Policy Implications
V. Concluding Remarks
APPENDIX
REFERENCES
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