Abstract

http://ssrn.com/abstract=1908630
 
 

References (22)



 
 

Citations (1)



 


 



On the Competition Enhancing Effects of Exclusive Dealing Contracts


Linda Gratz


E.CA Economics; Ludwig-Maximilians-Universität München - Munich Graduate School of Economics (MGSE)

Markus Reisinger


WHU - Otto Beisheim School of Management; CESifo (Center for Economic Studies and Ifo Institute)

August 12, 2011


Abstract:     
Antitrust scholars have argued that exclusive contracts have anticompetitive, or at best neutral effects, if no efficiencies are generated. In contrast, this paper shows that exclusive contracts can have procompetitive effects, provided buyers are imperfect downstream competitors and contract breach is feasible. In that case, an efficient entrant is not necessarily foreclosed through exclusive contracts but induces buyers to breach. Because breaching buyers have to pay expectation damages to the incumbent, the downstream profits they obtain when breaching must be large enough. Therefore, the entrant needs to set a lower wholesale price than absent exclusive contracts, leading to lower final consumer prices and higher welfare.

Number of Pages in PDF File: 33

Keywords: exclusive contracts, contract breach, antitrust policy

JEL Classification: D43, K21, L12, L42

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Date posted: August 12, 2011 ; Last revised: February 28, 2013

Suggested Citation

Gratz, Linda and Reisinger, Markus, On the Competition Enhancing Effects of Exclusive Dealing Contracts (August 12, 2011). Available at SSRN: http://ssrn.com/abstract=1908630 or http://dx.doi.org/10.2139/ssrn.1908630

Contact Information

Linda Gratz
E.CA Economics ( email )
Schlossplatz 1
Berlin, 10178
Germany
+49 30 21231 7087 (Phone)
+49 30 21231 7099 (Fax)
Ludwig-Maximilians-Universität München - Munich Graduate School of Economics (MGSE)
Kaulbachstrasse 45
München, 80539
Germany
Markus Reisinger (Contact Author)
WHU - Otto Beisheim School of Management ( email )
Burgplatz 2
Vallendar, 56179
Germany
00 49 261 6509 290 (Phone)
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
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