Naked Exclusion: Towards a Behavioral Approach to Exclusive Dealing

CentER Discussion Paper Series No. 2009-30

TILEC Discussion Paper No. 2009-017

44 Pages Posted: 13 May 2009 Last revised: 6 Jul 2009

See all articles by Jan Boone

Jan Boone

Tilburg University - Center for Economic Research (CentER); Centre for Economic Policy Research (CEPR); TILEC

Wieland Müller

University of Vienna, Department of Economics & VCEE; Tilburg University, Department of Economics & CentER

Sigrid Suetens

University of Antwerp - Faculty of Applied Economics; Tilburg University

Multiple version iconThere are 2 versions of this paper

Date Written: May 8, 2009

Abstract

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.

Keywords: exclusive dealing, entry deterrence, foreclosure, contracts, externalities, coordination, experiments

JEL Classification: C91, L12, L42

Suggested Citation

Boone, Jan and Müller, Wieland and Suetens, Sigrid, Naked Exclusion: Towards a Behavioral Approach to Exclusive Dealing (May 8, 2009). CentER Discussion Paper Series No. 2009-30; TILEC Discussion Paper No. 2009-017. Available at SSRN: https://ssrn.com/abstract=1403842 or http://dx.doi.org/10.2139/ssrn.1403842

Jan Boone (Contact Author)

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2399 (Phone)
+31 13 466 3042 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

TILEC ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Wieland Müller

University of Vienna, Department of Economics & VCEE ( email )

Oskar-Morgenstern-Platz 1
Vienna, A-1090
Austria

HOME PAGE: http://https://homepage.univie.ac.at/wieland.mueller/

Tilburg University, Department of Economics & CentER ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/w.mueller-3.htm

Sigrid Suetens

University of Antwerp - Faculty of Applied Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium
+32 3 220 40 38 (Phone)

Tilburg University

Postbus 90153
Tilburg, DC 5000 LE
Netherlands

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