In this paper, we provide a conceptual framework for understanding the phenomenon of exclusive dealing, and we explore the motivations for and effects of its use. For a broad class of models, we characterize the outcome of a contracting game in which manufacturers may employ exclusive dealing provisions in their contracts. We then apply this characterization to a sequence of specialized settings. We demonstrate that exclusionary contractual provisions may be irrelevant, anticompetitive, or efficiency-enhancing, depending upon the setting. More specifically, we exhibit the potential for anticompetitive effects in non-coincident markets (that is, markets other than the ones in which exclusive dealing is practiced), and we explore the potential for the enhancement of efficiency in a setting where common representation gives rise to incentive conflicts. In each instance, we describe the manner in which equilibrium outcomes would be altered by a ban on exclusive dealing. We demonstrate that a ban may have surprisingly subtle and unintended effects.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
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Length: Date of creation: Jul 1996 Date of revision: Publication status: published as Bernheim, B. Douglas and Michael D. Whinston. "Exclusive Dealing," Journal of Political Economy, 1998, v106(1,Feb), 64-103. Handle: RePEc:nbr:nberwo:5666
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Article
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)
B. Douglas Bernheim & Michael D. Whinston, .
"Exclusive Dealing,"
Working Papers
96008, Stanford University, Department of Economics.
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Find related papers by JEL classification: L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
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.:
Bernheim, B Douglas & Whinston, Michael D, 1986.
"Common Agency,"
Econometrica,
Econometric Society, vol. 54(4), pages 923-42, July.
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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.
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Cited by: (explanations, 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.) This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.