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ON THE ANTICOMPETITIVE EFFECT OF EXCLUSIVE DEALING WHEN ENTRY BY MERGER IS POSSIBLE -super-

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  • CHIARA FUMAGALLI
  • MASSIMO MOTTA
  • LARS PERSSON

Abstract

Abstract We extend the literature on exclusive dealing by allowing the incumbent and the potential entrant to merge. This uncovers new effects. First, exclusive dealing can be used to improve the incumbent's bargaining position in the merger negotiation. Second, the incumbent finds it easier to elicit the buyer's acceptance of exclusivity. Third, despite allowing the more efficient technology to find its way into the industry, exclusive dealing reduces welfare because (i) it may trigger entry through merger whereas independent entry would be socially optimal and (ii) it may deter entry altogether. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.

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  • Chiara Fumagalli & Massimo Motta & Lars Persson, 2009. "ON THE ANTICOMPETITIVE EFFECT OF EXCLUSIVE DEALING WHEN ENTRY BY MERGER IS POSSIBLE -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 57(4), pages 785-811, December.
  • Handle: RePEc:bla:jindec:v:57:y:2009:i:4:p:785-811
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    References listed on IDEAS

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    Cited by:

    1. Kitamura, Hiroshi & Matsushima, Noriaki & Sato, Misato, 2018. "Exclusive contracts with complementary inputs," International Journal of Industrial Organization, Elsevier, vol. 56(C), pages 145-167.
    2. repec:eee:ecolet:v:164:y:2018:i:c:p:31-34 is not listed on IDEAS
    3. repec:eee:jouret:v:93:y:2017:i:3:p:317-335 is not listed on IDEAS
    4. Kitamura, Hiroshi & Matsushima, Noriaki & Sato, Misato, 2017. "Exclusive contracts and bargaining power," Economics Letters, Elsevier, vol. 151(C), pages 1-3.
    5. Norbäck, Pehr-Johan & Persson, Lars & Tåg, Joacim, 2018. "Threatening to buy: Private equity buyouts and antitrust policy," Economics Letters, Elsevier, vol. 164(C), pages 31-34.
    6. Ralph M. Braid, 2016. "Potential merger-forcing entry reduces maximum spacing between firms in spatial competition," Papers in Regional Science, Wiley Blackwell, vol. 95(3), pages 653-669, August.
    7. Hiroshi Kitamura & Noriaki Matsushima & Misato Sato, 2018. "Naked exclusion under exclusive-offer competition," ISER Discussion Paper 1021, Institute of Social and Economic Research, Osaka University.

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