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Exclusive Contracts under Financial Constraints

Listed author(s):
  • Kitamura Hiroshi

    ()

    (Sapporo Gakuin University)

Registered author(s):

    This paper constructs a model of anticompetitive exclusive dealing in the presence of financial constraints. Because of the presence of these constraints, the incumbent cannot remain in business if a deviant buyer appears. We argue that the existence of financial constraints eliminates the buyer's profit in deviating from exclusive contracts. As a result, when compared with previous studies, the possibility of exclusion increases. That is, exclusion arises, even when buyers compete less intensively.

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    File URL: https://www.degruyter.com/view/j/bejeap.2011.11.issue-1/1935-1682.2677/1935-1682.2677.xml?format=INT
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    Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

    Volume (Year): 11 (2011)
    Issue (Month): 1 (September)
    Pages: 1-31

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    Handle: RePEc:bpj:bejeap:v:11:y:2011:i:1:n:57
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    1. Rasmusen, Eric B & Ramseyer, J Mark & Wiley, John S, Jr, 1991. "Naked Exclusion," American Economic Review, American Economic Association, vol. 81(5), pages 1137-1145, December.
    2. Boone, Jan & Müller, Wieland & Suetens, Sigrid, 2009. "Naked exclusion: Towards a behavioral approach to exclusive dealing," CEPR Discussion Papers 7303, C.E.P.R. Discussion Papers.
    3. Landeo, Claudia M. & Spier, Kathryn E., 2007. "Naked Exclusion: An Experimental Study of Contracts with Externalities," MPRA Paper 9143, University Library of Munich, Germany.
    4. John Simpson & Abraham L. Wickelgren, 2007. "Naked Exclusion, Efficient Breach, and Downstream Competition," American Economic Review, American Economic Association, vol. 97(4), pages 1305-1320, September.
    5. Smith, Angela M., 2011. "An experimental study of exclusive contracts," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 4-13, January.
    6. Chiara Fumagalli & Massimo Motta & Thomas Roende, 2009. "Exclusive dealing, entry, and mergers," CSEF Working Papers 225, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    7. Yong, Jong-Say, 1999. "Exclusionary Vertical Contracts and Product Market Competition," The Journal of Business, University of Chicago Press, vol. 72(3), pages 385-406, July.
    8. David Meza & Mariano Selvaggi, 2007. "Exclusive contracts foster relationship-specific investment," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 85-97, 03.
    9. Marvel, Howard P, 1982. "Exclusive Dealing," Journal of Law and Economics, University of Chicago Press, vol. 25(1), pages 1-25, April.
    10. Fumagalli, Chiara & Motta, Massimo, 2002. "Exclusive Dealing and Entry, when Buyers Compete," CEPR Discussion Papers 3493, C.E.P.R. Discussion Papers.
    11. Wright, Julian, 2008. "Naked exclusion and the anticompetitive accommodation of entry," Economics Letters, Elsevier, vol. 98(1), pages 107-112, January.
    12. Cédric Argenton, 2010. "EXCLUSIVE QUALITY -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 690-716, 09.
    13. Abito, Jose Miguel & Wright, Julian, 2008. "Exclusive dealing with imperfect downstream competition," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 227-246, January.
    14. Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
    15. Julian Wright, 2009. "Exclusive Dealing and Entry, When Buyers Compete: Comment," American Economic Review, American Economic Association, vol. 99(3), pages 1070-1081, June.
    16. Kitamura, Hiroshi, 2010. "Exclusionary vertical contracts with multiple entrants," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 213-219, May.
    17. de Fontenay, Catherine C. & Gans, Joshua S. & Groves, Vivienne, 2010. "Exclusivity, competition and the irrelevance of internal investment," International Journal of Industrial Organization, Elsevier, vol. 28(4), pages 336-340, July.
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