Coerced Reciprocal Dealing and the Leverage Theory
Recent international mergers have potentially revived interest in a long-standing concern of U.S. courts that, under certain conditions, a conglomerate that buys from and sells products to its intermediary supplier may be able to profitably leverage its downstream market power to restrict competition in the upstream market and harm welfare via coerced reciprocal dealing. Economists have debated the court precedent, invoking the leverage theory established from various models of tying arrangements, a cousin of coerced reciprocal dealing. We develop the first explicit model of coerced reciprocal dealings to investigate the validity of the leverage theory. Our results support the concerns.
|Date of creation:||Jun 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +61 2 6125 4705
Fax: +61 2 6125 5448
Web page: http://cama.crawford.anu.edu.au
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lorie, James H & Halpern, Paul, 1970. "Conglomerates: The Rhetoric and the Evidence," Journal of Law and Economics, University of Chicago Press, vol. 13(1), pages 149-66, April.
- Whinston, Michael D, 1990.
"Tying, Foreclosure, and Exclusion,"
American Economic Review,
American Economic Association, vol. 80(4), pages 837-59, September.
- Walters, Stephen J K, 1986. "Reciprocity Reexamined: The Consolidated Foods Case," Journal of Law and Economics, University of Chicago Press, vol. 29(2), pages 423-38, October.
- Goldberg, Lawrence G, 1973. "The Effect of Conglomerate Mergers on Competition," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 137-58, April.
When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2012-25. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cama Admin)
If references are entirely missing, you can add them using this form.