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Exclusive Dealing and the Market Power of Buyers

Author

Listed:
  • Ryoko Oki

    (Graduate School of Economics, University of Tokyo)

  • Noriyuki Yanagawa

    (Faculty of Economics, University of Tokyo)

Abstract

This paper examines the effects of exclusive dealing contracts offered by an incumbent distributor. The effectiveness of exclusive dealing contracts offered by distributors is quite different from those offered by incumbent manufacturers. The traditional literature has focused solely on exclusive dealing contracts made by incumbent manufacturers and has derived multiple equilibria within homogeneous price competition models. In contrast, this paper asserts that exclusive dealing contracts made by a distributor generate a unique equilibrium and that an efficient entrant must be excluded under the equilibrium as long as distributors have sufficient bargaining power.

Suggested Citation

  • Ryoko Oki & Noriyuki Yanagawa, 2010. "Exclusive Dealing and the Market Power of Buyers," CIRJE F-Series CIRJE-F-748, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2010cf748
    as

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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2010/2010cf748.pdf
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    References listed on IDEAS

    as
    1. Motta, Massimo & Persson, Lars & Fumagalli, Chiara, 2005. "Exclusive Dealing, Entry and Mergers," CEPR Discussion Papers 4902, C.E.P.R. Discussion Papers.
    2. Julian Wright, 2009. "Exclusive Dealing and Entry, When Buyers Compete: Comment," American Economic Review, American Economic Association, vol. 99(3), pages 1070-1081, June.
    3. Chiara Fumagalli & Massimo Motta, 2006. "Exclusive Dealing and Entry, when Buyers Compete," American Economic Review, American Economic Association, vol. 96(3), pages 785-795, June.
    4. 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.
    5. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    6. Paul Dobson & Michael Waterson, 1999. "Retailer power: recent developments and policy implications," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 14(28), pages 134-164.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Oki Ryoko & Yanagawa Noriyuki, 2011. "Exclusive Dealing and the Market Power of Buyers," Asian Journal of Law and Economics, De Gruyter, vol. 2(1), pages 1-25, April.

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