Work

Exclusive Contracts and Market Dominance

Year: 2015

Type: article

Abstract: We propose a new theory of exclusive dealing. The theory is based on the assumption that a dominant firm has a competitive advantage over its rivals, and that the buyers' willingness to pay for the product is private information. In this setting, the dominant firm can impose contractual restrictions on buyers without necessarily compensating them, implying that exclusive dealing contracts can be both profitable and anticompetitive. We discuss the general implications of the theory for competition policy and illustrate by examples its applicability to antitrust cases. (JEL D21, D43, D82, D86, K21, L13, L40)

Source: American Economic Review

DOI: 10.1257/aer.20131664

Authors: Giacomo Calzolari, Vincenzo Denicolò

Institutions: Centre for Economic Policy Research, European University Institute, University of Bologna, University of Leicester

Language: English

Topic: Merger and Competition Analysis

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W1533198031

FWCI: 10.46

Cites: 24

Cited by: 70

Related to: 10