While the previous literature on exclusive dealing has been concerned with the question of how exclusive dealing can raise static profits, this paper analyzes the question of how exclusive dealing can be used to predate in a dynamic context. It is shown that exclusive dealing may arise even if it reduces static profits. Exclusivity provisions may not only allow excluding efficient competitors, but indeed are often a cheaper exclusionary tool than predatory pricing. This is the case if the prey's access to finance is not too limited. Furthermore, it is more likely that exclusive dealing is preferable compared to predatory pricing the more market power the predator has with respect to the prey.
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Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number
10626.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Rasmusen, Eric B & Ramseyer, J Mark & Wiley, John S, Jr, 1991.
"Naked Exclusion,"
American Economic Review,
American Economic Association, vol. 81(5), pages 1137-45, December.
[Downloadable!] (restricted)
B. Douglas Bernheim & Michael D. Whinston, 1998.
"Exclusive Dealing,"
Journal of Political Economy,
University of Chicago Press, vol. 106(1), pages 64-103, February.
[Downloadable!] (restricted)
Other versions:
B. Douglas Bernheim & Michael D. Whinston, 1996.
"Exclusive Dealing,"
NBER Working Papers
5666, National Bureau of Economic Research, Inc.
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