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Incapacitating the Competition: The Impact of Vertical Restraints on Technology Adoption

Author

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  • Grigolon, Laura
  • Sovinsky, Michelle

Abstract

Vertical restraints imposed on some downstream buyers can affect non-contracted firms by weakening upstream suppliers’ effective viability. We study these contracting externalities using Intel’s exclusionary agreements with PC manufacturers in the microprocessor market. Combining litigation-based measures of restraints with PC data, we estimate dynamic models of AMD adoption that allow for cross-buyer spillovers. We find that exclusivity imposed on a given buyer significantly reduces adoption by other, non-contracted buyers, generating sizable and persistent market-wide effects. The paper provides the first empirical quantification of the economic magnitude of contracting externalities and highlights the broader competitive risks posed by exclusionary contracting.

Suggested Citation

  • Grigolon, Laura & Sovinsky, Michelle, 2026. "Incapacitating the Competition: The Impact of Vertical Restraints on Technology Adoption," CEPR Discussion Papers 21046, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:21046
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    File URL: https://cepr.org/publications/DP21046
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    More about this item

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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