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Naked Exclusion : Towards a Behavioral Approach to Exclusive Dealing

Author

Listed:
  • Boone, J.

    (Tilburg University, School of Economics and Management)

  • Müller, W.

    (Tilburg University, School of Economics and Management)

  • Suetens, S.

    (Tilburg University, School of Economics and Management)

Abstract

We report experimental results on exclusive dealing inspired by the literature on "naked exclusion.'' Our key findings are: First, exclusion of a more efficient entrant is a widespread phenomenon in lab markets. Second, allowing incumbents to discriminate between buyers increases exclusion rates compared to the non-discriminatory case only when payments to buyers can be offered sequentially and secretly. Third, allowing discrimination does not lead to significant decreases in costs of exclusion. Accounting for the observation that buyers are more likely to accept an exclusive deal the higher is the payment, substantially improves the fit between theoretical predictions and observed behavior.
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Suggested Citation

  • Boone, J. & Müller, W. & Suetens, S., 2009. "Naked Exclusion : Towards a Behavioral Approach to Exclusive Dealing," Other publications TiSEM 6613eb2c-6339-48e1-b940-6, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:6613eb2c-6339-48e1-b940-64ea91eba827
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    References listed on IDEAS

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    Cited by:

    1. Kitamura Hiroshi, 2011. "Exclusive Contracts under Financial Constraints," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-31, September.
    2. Jan Boone & Wieland Müller & Sigrid Suetens, 2014. "Naked Exclusion in the Lab: The Case of Sequential Contracting," Journal of Industrial Economics, Wiley Blackwell, vol. 62(1), pages 137-166, March.
    3. Hiroshi Kitamura & Misato Sato & Koki Arai, 2014. "Exclusive contracts when the incumbent can establish a direct retailer," Journal of Economics, Springer, vol. 112(1), pages 47-60, May.
    4. Laura Nurski & Frank Verboven, 2016. "Exclusive Dealing as a Barrier to Entry? Evidence from Automobiles," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(3), pages 1156-1188.

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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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