It is shown that an incumbent seller who faces a threat of entry into his or her market will sign long-term contracts that prevent the entry of some lower-cost producers even though they do not preclude entry completely. Moreover, when a seller possesses superior information about the likelihood of entry, it is shown that the length of the contract may act as a signal of the true probability of entry.

Book description: Oliver Williamson is one of the most important industrial economists of our time. He has made a major contribution to economic scholarship and remains at the forefront of research into transaction costs and the theory of the firm. In this volume he has provided a very careful selection of what he considers to be the most important articles and papers in industrial organization. It contains 23 articles, dating from 1937 to 1987. Papers by Kenneth J. Arrow, Ronald H. Coase, Franco Modigliani, Michael Rothschild, Herbert A. Simon, George J. Stigler and Joseph Stiglitz are included in this collection.