Explain how increased bargaining power might occur


Some manufacturers that contract with the U.S. Government have "most-favored" clauses in their contracts. This provision makes the firm sell to the Government at the lowest price it charges related to other customers. On the surface, this provision seems to be advantageous to the Government because it ensures them the lowest price. Others argue, however, that the clause gives manufacturers more power in bargaining with other buyers. Explain how this increased bargaining power might occur.

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Microeconomics: Explain how increased bargaining power might occur
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