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Exclusionary Vertical Contracts with Multiple Entrants

Author

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  • Hiroshi Kitamura

    () (Graduate School of Economics, Osaka University)

Abstract

This paper constructs a model of anticompetitive exclusive dealing in the presence of multiple entrants. Unlike a single-entrant model in the extant literature, an entrant competes not only with the incumbent to deal with buyers but also with other entrants. The competition among entrants then plays the role of commitment such that low wholesale prices are offered to buyers when they deviate from exclusive contracts. We argue that this commitment effect becomes a barrier to exclusive dealing and that the results differ drastically from the predictions of the single-entrant framework.

Suggested Citation

  • Hiroshi Kitamura, 2008. "Exclusionary Vertical Contracts with Multiple Entrants," Discussion Papers in Economics and Business 08-39, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  • Handle: RePEc:osk:wpaper:0839
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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0839.pdf
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    References listed on IDEAS

    as
    1. Chiara Fumagalli & Massimo Motta, 2006. "Exclusive Dealing and Entry, when Buyers Compete," American Economic Review, American Economic Association, pages 785-795.
    2. 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.
    3. Ishibashi, Ikuo, 2003. "A note on credible spatial entry deterrence," International Journal of Industrial Organization, Elsevier, vol. 21(2), pages 283-289, February.
    4. Ashiya, M., 1998. "Weak Entrants are Welcome," ISER Discussion Paper 0468, Institute of Social and Economic Research, Osaka University.
    5. Ashiya, Masahiro, 2000. "Weak entrants are welcome," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 975-984, August.
    6. Chiara Fumagalli & Massimo Motta, 2006. "Exclusive Dealing and Entry, when Buyers Compete," American Economic Review, American Economic Association, pages 785-795.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Vertical Relation; Exclusive Dealing; Multiple Entrants; Antitrust Policy.;

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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