Explain how the increased bargaining power might occur

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

Reference no: EM13921552

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