Beyond Naked Exclusion: Exclusive Dealing after Dentsply

Abstract

Although many have come to regard the collection of models that predict anticompetitive consequences from strategic conduct by dominant firms as a “post-Chicago” revolution, the canonical post-Chicago “Naked Exclusion” theory of exclusive dealing maintains the fundamental Chicago structure where exclusive dealing is modeled as a contract driven quid pro quo. However, in the highly influential case U.S. v. Dentsply, the Third Circuit analyzed exclusive dealing in terms of a discriminatory refusal to deal where buyers received no compensation for exclusivity. This article develops a model of exclusive dealing consistent with Dentsply and many other major antitrust cases.

Keywords: Naked Exclusion, Exclusive Dealing, Vertical Restraints, post-Chicago antitrust, Dentsply, Discriminatory Refusal to Deal

JEL Classification: L42, K21