Exclusive Dealing with an Active Entrant: A Laboratory Experiment
67 Pages Posted: 18 Jan 2018
Date Written: January 12, 2018
This paper presents an experimental study of exclusive dealing with an active entrant seller. We compare three treatments, which differ in terms of the sellers' moves, and find significant differences to the incumbent seller's exclusive offer and exclusion rates. Compared to the case where the incumbent moves first, the incumbent under the simultaneous-move case is less likely to adopt divide-and-conquer strategies, which significantly reduces the exclusion rates. In contrast, if the entrant moves first, the incumbent is more likely to adopt divide-and-conquer strategies, and the exclusion rates increase. Thus, an active entrant does not necessarily reduce the likelihood of exclusion.
Keywords: Exclusive dealing, Contracts with externalities, Divide-and-conquer offer, Laboratory experiment
JEL Classification: C91, L12, L42
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