Exclusive Dealing and the Market Power of Buyers
This paper examines the effects of exclusive dealing contracts offered by an incumbent distributor. The traditional literature has focused solely on exclusive dealing contracts offered by incumbent manufacturers, which derive multiple equilibria within homogeneous price competition models. In contrast, exclusive dealing contracts offered by distributors generate unique equilibrium, wherein an efficient entrant can be excluded as long as distributors have sufficient bargaining power. We also introduce an entrant in the manufacturing side, and show that the upstream entry may promote exclusion of the efficient entry by an exclusive dealing contract.
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Volume (Year): 2 (2011)
Issue (Month): 1 (April)
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References listed on IDEAS
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"Buyer power and supplier incentives,"
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- Fumagalli, Chiara & Motta, Massimo, 2002. "Exclusive Dealing and Entry, when Buyers Compete," CEPR Discussion Papers 3493, C.E.P.R. Discussion Papers.
- Julian Wright, 2009. "Exclusive Dealing and Entry, When Buyers Compete: Comment," American Economic Review, American Economic Association, vol. 99(3), pages 1070-1081, June. Full references (including those not matched with items on IDEAS)
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