Do Exclusivity Arrangments Harm Consumers?

Jihui Chen ()
Additional contact information
Jihui Chen: Department of Economics, Illinois State University

No 20111001, Working Paper Series from Illinois State University, Department of Economics

Abstract: This paper explores welfare implications of exclusivity arrangements, e.g. iPhone?s part- nership with wireless carriers. Two ?rms compete in a primary good market, while a monop- olistic ?rm o¤ers a value-adding good. The primary good can be consumed alone, while the value-adding good must be consumed with the primary good. The monopolistic ?rm forms an exclusivity partnership with one of the primary good providers. Buyers are able to consume the value-adding good only if they patronize the monopolistic ?rm?s exclusive partner. This practice allows the monopolistic ?rm to extract surplus from the primary good market. Sur- prisingly, consumers bene?t from the exclusivity arrangement. However, overall social welfare declines, despite improvements to consumer welfare.

Keywords: exclusivity; consumer welfare; market efficiency; hotelling (search for similar items in EconPapers)
JEL-codes: L1 L2 L4 L5 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2011-10
New Economics Papers: this item is included in nep-com, nep-ind and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://economics.illinoisstate.edu/RePec/Papers/iPhone1015.pdf First version, 2011 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://economics.illinoisstate.edu/RePec/Papers/iPhone1015.pdf [301 Moved Permanently]--> https://economics.illinoisstate.edu/RePec/Papers/iPhone1015.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ils:wpaper:20111001

Access Statistics for this paper

More papers in Working Paper Series from Illinois State University, Department of Economics
Bibliographic data for series maintained by B. Andrew Chupp ( this e-mail address is bad, please contact ).