Which Is Better for Durable Goods Producers, Exclusive or Open Supply Chain?

We explore the supply chain problem of a downstream durable goods monopolist, who chooses one following trading modes: an exclusive with incumbent supplier or open chain, allowing monopolist to trade new efficient entrant in future. The expected retail price reduction future dampens profitability original firms. An entrant's entry magnifies such reduction, causing further firms' joint profits. In equilibrium, escape reductions, although it expects entry.