Naked Exclusion: Towards a Behavioral Approach to Exclusive Dealing
Tilburg University - Center for Economic Research (CentER); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA); TILEC
Tilburg University - Department of Economics; University of Vienna - Faculty of Business, Economics, and Statistics
University of Antwerp - Faculty of Applied Economics; Tilburg University
May 8, 2009
CentER Discussion Paper Series No. 2009-30
TILEC Discussion Paper No. 2009-017
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.
Number of Pages in PDF File: 44
Keywords: exclusive dealing, entry deterrence, foreclosure, contracts, externalities, coordination, experiments
JEL Classification: C91, L12, L42working papers series
Date posted: May 13, 2009 ; Last revised: July 6, 2009
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