Naked Exclusion with Heterogeneous Buyers

Ying Chen and Jan Zapal

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: We investigate the effects of buyer heterogeneity in a market in which an incumbent firm prevents entry when it signs enough exclusionary contracts with buyers. With heterogeneous buyers several well-known results in exclusionary contracting with homogenous buyers are overturned and novel ones emerge. First, inefficient equilibria exist in which exclusionary contracts are signed but entry still occurs, and the loss of consumer surplus falls on small buyers. Second, sequential contracting may be more pro-competitive than simultaneous contracting in the sense that entry occurs under sequential but not simultaneous contracting. When this happens, sequential Pareto dominates simultaneous contracting.

Keywords: contracting with externalities; exclusionary contracts; buyer heterogeneity; pro-competitive; anti-competitive; sequential vs simultaneous contracting (search for similar items in EconPapers)
JEL-codes: C78 D21 L12 L42 (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-com, nep-cta, nep-mic and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Naked exclusion with heterogeneous buyers (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:cer:papers:wp741

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