Exclusive Dealing and Market Foreclosure: Further Experimental Results

Journal of Institutional and Theoretical Economics, Forthcoming

27 Pages Posted: 10 Sep 2011  

Claudia M. Landeo

University of Alberta - Department of Economics

Kathryn E. Spier

Harvard University - Law School - Faculty; National Bureau of Economic Research (NBER)

Date Written: July 31, 2011

Abstract

This paper reports further experimental results on exclusive dealing contracts. We extend Landeo and Spier's (2009) work by studying Naked Exclusion in a strategic environment that involves a four-player, two-stage game. In addition to the roles of seller and buyers, our experimental environment includes the role of a potential entrant (a fourth passive player). Our findings are as follows. First, payoff endogeneity increases the likelihood of exclusion. Second, communication between the potential entrant and the buyers increases buyers' coordination on their preferred equilibrium (equilibrium with entry) and hence, reduces the likelihood of exclusion. Communication also induces more generous offers.

Keywords: Exclusive Dealing, Coordination Games, Experiments, Contracting with Externalities, Bargaining with Externalities, Social Preferences, Reciprocity, Intentionality, Regard for Others, Social Proximity, Antitrust

JEL Classification: C72, C91, D62, D86, K12

Suggested Citation

Landeo, Claudia M. and Spier, Kathryn E., Exclusive Dealing and Market Foreclosure: Further Experimental Results (July 31, 2011). Journal of Institutional and Theoretical Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1924941

Claudia M. Landeo (Contact Author)

University of Alberta - Department of Economics ( email )

Henry Marshall Tory Building 7-25
Edmonton, Alberta T6G 2H4
Canada

HOME PAGE: http://sites.google.com/a/ualberta.ca/claudia-m-landeo-s-home-page/home

Kathryn E. Spier

Harvard University - Law School - Faculty ( email )

1575 Massachusetts
Hauser 302
Cambridge, MA 02138
United States
(617) 496-0019 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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