Exclusive Dealing: Loyalty Discounts Should Always be Legal, Except in Case of High Entry Barriers

11 Pages Posted: 30 Oct 2015

See all articles by Magdalena Laskowska

Magdalena Laskowska

Université Paris II - Panthéon-Assas

Date Written: October 28, 2015

Abstract

Recently, there has been growing literature on exclusive dealing and loyalty discounts. I posit that any exclusive dealing should be per se illegal, except in case of loyalty discounts, as it excludes competition at least for the time of its duration. Contrary to the legal and economic literature, I state that loyalty discounts should always be legal, except in case of high entry barriers (or high barriers to expansion). If high entry barriers (or high barriers to expansion) occur, I confirm that the US antitrust jurisprudence is appropriate: unless a reference market is foreclosed about over 40%, loyalty discounts are legal. Owing to the legal solution I propose in this paper, enhanced economic results may be achieved: competition gets intensified, and any exclusion of rivals that may arise would result from a strong competitive process.

Keywords: exclusive dealing, entry barriers, market foreclosure, market power, economies of scale

Suggested Citation

Laskowska, Magdalena, Exclusive Dealing: Loyalty Discounts Should Always be Legal, Except in Case of High Entry Barriers (October 28, 2015). Available at SSRN: https://ssrn.com/abstract=2682584 or http://dx.doi.org/10.2139/ssrn.2682584

Magdalena Laskowska (Contact Author)

Université Paris II - Panthéon-Assas ( email )

12 place du Pantheon
Paris cedex 06, 75231
France

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