Suppose a buyer is willing to pay up to $250 for one unit of some good. There is currently only one supply of the good and supplying one unit of the good is $150. In the next period, a rival supplier may appear in the market. The rival's costs of supplying is not known but is assumed to be importantly distributed between [$100, $200].
Describe a long-term contract shoeing all necessary steps that the current supplier can offer the buyer that will be attractive to the buyer and will also strengthen the incumbent's monopoly power.