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Wholesale most-favored-nation clauses and price discrimination with negative consumption externalities: equivalence results

Author

Listed:
  • Felipe Avilés-Lucero

    () (Central Bank of Chile)

  • Andre Boik

    () (University of California Davis)

Abstract

Most-favored-nation (MFN) clauses in wholesale contracts have been the subject of recent controversy and renewed antitrust scrutiny. We demonstrate that a vertical environment where MFN clauses may be endogenously adopted shares equivalence properties with an environment where a final goods monopolist sells a good exhibiting negative consumption externalities directly to consumers and is faced with an exogenously imposed uniform pricing requirement. By leveraging these equivalence results, we are able to offer a new and useful framework for assessing the welfare effects of wholesale MFNs and which generates new insights.

Suggested Citation

  • Felipe Avilés-Lucero & Andre Boik, 2018. "Wholesale most-favored-nation clauses and price discrimination with negative consumption externalities: equivalence results," Journal of Regulatory Economics, Springer, vol. 54(3), pages 266-291, December.
  • Handle: RePEc:kap:regeco:v:54:y:2018:i:3:d:10.1007_s11149-018-9371-0
    DOI: 10.1007/s11149-018-9371-0
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    References listed on IDEAS

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    Cited by:

    1. Michele Bisceglia & Jorge Padilla & Salvatore Piccolo, 2019. "When Prohibiting Platform Parity Agreements Harms Consumers," CSEF Working Papers 542, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

    More about this item

    Keywords

    MFNs; Vertical; Foreclosure; Price discrimination;

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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