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Exclusive Dealing Contracts by Distributors

Author

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  • Ryoko Oki

    (Graduate School of Economics, University of Tokyo)

  • Noriyuki Yanagawa

    (Faculty of Economics, University of Tokyo)

Abstract

The existing literature about exclusive dealing contracts has focused on cases where an incumbent manufacturer o¤ers exclusive contracts to deter an entry. In contrast, we consider the case where an incumbent distributor o¤ers exclusive dealing contracts to deter an entry. Exclusive dealing contracts by a distributor are less e¤ective. We will show that the outcome of such contracts is quite di¤erent from the outcomes in the traditional literature. If the number of manufacturers is su¢ ciently high, it is impossible to exclude an e¢ cient entry. Furthermore, if we allow two- part tari¤ contracts, the entrant distributor can enter the market for any number of manufacturers.

Suggested Citation

  • Ryoko Oki & Noriyuki Yanagawa, 2011. "Exclusive Dealing Contracts by Distributors," CIRJE F-Series CIRJE-F-789, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2011cf789
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2011/2011cf789.pdf
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    References listed on IDEAS

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    1. Inderst, Roman & Wey, Christian, 2007. "Buyer power and supplier incentives," European Economic Review, Elsevier, vol. 51(3), pages 647-667, April.
    2. Fumagalli, Chiara & Motta, Massimo & Persson, Lars, 2005. "Exclusive Dealing, Entry and Mergers," CEPR Discussion Papers 4902, C.E.P.R. Discussion Papers.
    3. Julian Wright, 2009. "Exclusive Dealing and Entry, When Buyers Compete: Comment," American Economic Review, American Economic Association, vol. 99(3), pages 1070-1081, June.
    4. 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.
    5. 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.
    6. Michael D. Whinston & Ilya R. Segal, 2000. "Naked Exclusion: Comment," American Economic Review, American Economic Association, vol. 90(1), pages 296-309, March.
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