Do Exclusivity Arrangments Harm Consumers?
This paper explores welfare implications of exclusivity arrangements, e.g. iPhone?s part- nership with wireless carriers. Two ?rms compete in a primary good market, while a monop- olistic ?rm o¤ers a value-adding good. The primary good can be consumed alone, while the value-adding good must be consumed with the primary good. The monopolistic ?rm forms an exclusivity partnership with one of the primary good providers. Buyers are able to consume the value-adding good only if they patronize the monopolistic ?rm?s exclusive partner. This practice allows the monopolistic ?rm to extract surplus from the primary good market. Sur- prisingly, consumers bene?t from the exclusivity arrangement. However, overall social welfare declines, despite improvements to consumer welfare.
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.:
- Sue H. Mialon, 2014.
"Product Bundling And Incentives For Mergers And Strategic Alliances,"
Western Economic Association International, vol. 52(2), pages 562-575, 04.
- Sue Mialon, 2009. "Product-bundling and Incentives for Merger and Strategic Alliance," Emory Economics 0907, Department of Economics, Emory University (Atlanta).
- Subhashish M. Chowdhury & Stephen Martin, 2010.
"Exclusivity and exclusion on platform markets,"
Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS)
10-14, School of Economics, University of East Anglia, Norwich, UK..
- Chen, Yongmin, 1997. "Equilibrium Product Bundling," The Journal of Business, University of Chicago Press, vol. 70(1), pages 85-103, January.
- McAfee, R Preston & Schwartz, Marius, 1994. "Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity, and Uniformity," American Economic Review, American Economic Association, vol. 84(1), pages 210-30, March.
- Subhasish M. Chowdhury & Steven Martin, 2010.
"Exclusivity and Exclusion on Platform Markets,"
University of East Anglia Applied and Financial Economics Working Paper Series
016, School of Economics, University of East Anglia, Norwich, UK..
- Choi, Jay Pil & Stefanadis, Christodoulos, 2001. "Tying, Investment, and the Dynamic Leverage Theory," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 52-71, Spring.
- Miao, Chun-Hui, 2008. "Tying, Compatibility and Planned Obsolescence," MPRA Paper 13523, University Library of Munich, Germany.
- William James Adams & Janet L. Yellen, 1976. "Commodity Bundling and the Burden of Monopoly," The Quarterly Journal of Economics, Oxford University Press, vol. 90(3), pages 475-498.
- R. Preston McAfee & John McMillan & Michael D. Whinston, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 371-383.
- Fumagalli, Chiara & Motta, Massimo, 2002.
"Exclusive Dealing and Entry, when Buyers Compete,"
CEPR Discussion Papers
3493, C.E.P.R. Discussion Papers.
- Dennis W. Carlton & Michael Waldman, 1998.
"The Strategic Use Of Tying To Preserve And Create Market Power In Evolving Industries,"
University of Chicago - George G. Stigler Center for Study of Economy and State
145, Chicago - Center for Study of Economy and State.
- Dennis W. Carlton & Michael Waldman, 2002. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 194-220, Summer.
- Dennis W. Carlton & Michael Waldman, 1998. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," NBER Working Papers 6831, National Bureau of Economic Research, Inc.
- Dennis W. Carlton & Joshua S. Gans & Michael Waldman, 2010.
"Why Tie a Product Consumers Do Not Use?,"
American Economic Journal: Microeconomics,
American Economic Association, vol. 2(3), pages 85-105, August.
- Joshua S. Gans & Stephen P. King, 2006. "PAYING FOR LOYALTY: PRODUCT BUNDLING IN OLIGOPOLY -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 54(1), pages 43-62, 03.
- Armstrong, Mark, 2006. "Price discrimination," MPRA Paper 4693, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:ils:wpaper:20111001. 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: (B. Andrew Chupp)
If references are entirely missing, you can add them using this form.