Exclusive Dealing with an Active Entrant: A Laboratory Experiment

67 Pages Posted: 18 Jan 2018

See all articles by Hiroshi Kitamura

Hiroshi Kitamura

Kyoto Sangyo University

Wataru Tamura

Nagoya University - Graduate School of Economics

Nagatomo Nakamura

Fuclty of Economics

Date Written: January 12, 2018

Abstract

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

Suggested Citation

Kitamura, Hiroshi and Tamura, Wataru and Nakamura, Nagatomo, Exclusive Dealing with an Active Entrant: A Laboratory Experiment (January 12, 2018). Available at SSRN: https://ssrn.com/abstract=3100807 or http://dx.doi.org/10.2139/ssrn.3100807

Hiroshi Kitamura (Contact Author)

Kyoto Sangyo University ( email )

Motoyama, Kamigamo, Kita-Ku
Kyoto, Kyoto 603-8555
Japan

HOME PAGE: http://sites.google.com/view/hiroshikitamura/home

Wataru Tamura

Nagoya University - Graduate School of Economics ( email )

1 Furo-cho
Chikusa-ku
Nagoya, 464-8601
Japan

Nagatomo Nakamura

Fuclty of Economics ( email )

Sapporo 062-8520
United States

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