Exclusionary Vertical Contracts with Multiple Entrants

21 Pages Posted: 12 Dec 2008 Last revised: 6 Sep 2011

Date Written: May 19, 2009

Abstract

This paper constructs a model of anticompetitive exclusive dealing in the presence of multiple entrants. Unlike the single-entrant model in previous literature, an entrant competes not only with the incumbent to deal with buyers but also with other entrants. The competition among entrants then serves as a commitment such that low wholesale prices are offered to buyers when they deviate from exclusive contracts. We argue that this commitment effect becomes a barrier to exclusive dealing and that the results differ drastically from the predictions of the single-entrant framework.

Keywords: Vertical Relation, Exclusive Dealing, Multiple Entrants, Antitrust Policy

JEL Classification: L12, L41, L42

Suggested Citation

Kitamura, Hiroshi, Exclusionary Vertical Contracts with Multiple Entrants (May 19, 2009). International Journal of Industrial Organization, Vol. 28, No. 3, 2010, Available at SSRN: https://ssrn.com/abstract=1314642

Hiroshi Kitamura (Contact Author)

Kyoto Sangyo University ( email )

Motoyama, Kamigamo, Kita-Ku
Kyoto, Kyoto 603-8555
Japan

HOME PAGE: http://sites.google.com/view/hiroshikitamura/home

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