This paper shows that demand asymmetries between a dominant input supplier and a smaller rival allow the dominant supplier to use exclusive contracts to sell its input at the monopoly price, even though the small rival remains in the market, offers its input at marginal cost, and is more...

Critical loss analysis is often used to argue that firms with large margins have more to lose from a reduction in sales and hence are less likely to increase prices. This argument ignores the fact that profit-maximizing competitors who do not coordinate their pricing only have large margins if...