Exploring a variant of the model of Aghion and Bolton Yields the following results. When an incumbent seller is constrained to price linearly, an exclusionary vertical contract Pareto-dominates spot sales by smoothing prices across states of the world ( potential entrant does or does not appear).

This paper considers a potential entrant that cannot enter without paying an avoidable cost and cannot commit toi that until after incumbent firms have committed to their output.

The "aftermarkets" literature focuses on two important questions: (1) Do durable goods manufacturers that control their aftermarkets have an incentive to charge afetrmarket prices that exceed costs? (2) How significant (in a welfare sense) is the resulting distortion? Unlike previous work, this...