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Exclusionary Vertical Restraints and Antitrust: Experimental Law and Economics Contributions

Vertical restraints have been subject of lively policy and academic discussions. Scholars associated with the Chicago School challenged early foreclosure doctrines by arguing that vertical restraints primarily reflected efficiency considerations. More recently, industrial organization economists have used the tools of game theory and information economics to showth at these business practices might actually serve anticompetitive purposes. The influence of the new economic theories on antitrust policies has been limited by the complexity of the models and the scarcity of empirical evidence. Experimental law and economics might advance the knowledge of the factors that affect the anticompetitive effects of vertical restraints. Hence, it might strengthen the contributions of academic work to the design and implementation of antitrust policies. This chapter is intended to contribute to the discussion of the exclusionary effects of vertical restraints, and the role of experimental law and economics in antitrust law. Special attention is devoted to vertical integration, exclusive dealing contracts, and tying and bundling practices. Although the experimental literature on exclusionary vertical restraints is relatively recent, the findings from these studies provide important insights. First, this research indicates that vertical restraints might indeed be used as market foreclosure mechanisms. Second, this work identifies previously non-modeled factors that might influence the effects of these business practices. My analysis underscores the importance of combining experimental and behavioral observation with theoretical modeling.

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File URL: http://uofa.ualberta.ca/-/media/arts/departments-institutes-and-centres/economics/wps/WP2012-24-Landeo.pdf
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Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2012-24.

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Length: 37 pages
Date of creation: 01 Oct 2012
Date of revision:
Handle: RePEc:ris:albaec:2012_024
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  1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
  2. Timothy N. Cason & Tridib Sharma, 2001. "Durable Goods, Coasian Dynamics, and Uncertainty: Theory and Experiments," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1311-1354, December.
  3. Bolton, Patrick & Whinston, Michael D, 1993. "Incomplete Contracts, Vertical Integration, and Supply Assurance," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 121-48, January.
  4. Crawford, Vincent, 1998. "A Survey of Experiments on Communication via Cheap Talk," Journal of Economic Theory, Elsevier, vol. 78(2), pages 286-298, February.
  5. A. Mitchell Polinsky & Steven Shavell (ed.), 2007. "Handbook of Law and Economics," Handbook of Law and Economics, Elsevier, edition 1, volume 2, number 2.
  6. A. Mitchell Polinsky & Steven Shavell (ed.), 2007. "Handbook of Law and Economics," Handbook of Law and Economics, Elsevier, edition 1, volume 1, number 1.
  7. Davis, Douglas D. & Holt, Charles a., 1993. "Experimental economics: Methods, problems and promise," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 8(2), pages 179-212.
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