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Exclusionary Vertical Contracts with Multiple Entrants

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  • Hiroshi Kitamura

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    (Graduate School of Economics, Osaka University)

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    Abstract

    This paper constructs a model of anticompetitive exclusive dealing in the presence of multiple entrants. Unlike a single-entrant model in the extant literature, an entrant competes not only with the incumbent to deal with buyers but also with other entrants. The competition among entrants then plays the role of commitment such that low wholesale prices are offered to buyers when they deviate from exclusive contracts. We argue that this commitment effect becomes a barrier to exclusive dealing and that the results differ drastically from the predictions of the single-entrant framework.

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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0839.pdf
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    Bibliographic Info

    Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 08-39.

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    Length: 36 pages
    Date of creation: Dec 2008
    Date of revision:
    Handle: RePEc:osk:wpaper:0839

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    Web page: http://www.econ.osaka-u.ac.jp/
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    Related research

    Keywords: Vertical Relation; Exclusive Dealing; Multiple Entrants; Antitrust Policy.;

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    1. Fumagalli, Chiara & Motta, Massimo, 2002. "Exclusive Dealing and Entry, when Buyers Compete," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3493, C.E.P.R. Discussion Papers.
    2. Ashiya, M., 1998. "Weak Entrants are Welcome," ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 0468, Institute of Social and Economic Research, Osaka University.
    3. Abito, Jose Miguel & Wright, Julian, 2008. "Exclusive dealing with imperfect downstream competition," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 26(1), pages 227-246, January.
    4. Ishibashi, Ikuo, 2003. "A note on credible spatial entry deterrence," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(2), pages 283-289, February.
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