Abstract

http://ssrn.com/abstract=1375704
 
 

References (76)



 


 



Market Share Exclusion


Mikko Packalen


University of Waterloo - Department of Economics

August 10, 2011


Abstract:     
A market share exclusion contract between a seller and a buyer prevents rival sellers from competing for a share of the buyer's purchases. For non-discriminatory contracting we show that, unlike exclusion through exclusive dealing, market share exclusion can be profitable even when buyers coordinate on the best equilibrium in the contract-acceptance subgame. The condition for the profitability of market share exclusion is characterized in terms of straightforward economic concepts. With discriminatory contracting market share exclusion contracts are generally less profitable than exclusive dealing contracts. The motive for employing market share exclusion contracts, which welfare impacts have not been well understood, instead of exclusive dealing contracts, which have been the focus of both theory and policy, may thus often be the avoidance of scrutiny by competition authorities rather than some more direct economic advantage of market share exclusion over exclusive dealing. However, we also show that market share exclusion decreases both buyer and total surplus. Hence, competition authorities should not view exclusion through exclusive dealing as a pre-requisite for the possibility of anti-competitive effects from exclusionary contracting.

Number of Pages in PDF File: 39

Keywords: Market Share Exclusion, Exclusive Dealing, Exclusion

JEL Classification: L42, K11, K21

working papers series


Download This Paper

Date posted: April 9, 2009 ; Last revised: August 11, 2011

Suggested Citation

Packalen, Mikko, Market Share Exclusion (August 10, 2011). Available at SSRN: http://ssrn.com/abstract=1375704 or http://dx.doi.org/10.2139/ssrn.1375704

Contact Information

Mikko Packalen (Contact Author)
University of Waterloo - Department of Economics ( email )
Waterloo, Ontario N2L 3G1
Canada
Feedback to SSRN


Paper statistics
Abstract Views: 501
Downloads: 104
Download Rank: 153,378
References:  76

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.219 seconds