Wholesale most-favored-nation clauses and price discrimination with negative consumption externalities: equivalence results

Felipe Avilés-Lucero () and Andre Boik ()
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Felipe Avilés-Lucero: Central Bank of Chile
Andre Boik: University of California Davis

Journal of Regulatory Economics, 2018, vol. 54, issue 3, No 3, 266-291

Abstract: Abstract Most-favored-nation (MFN) clauses in wholesale contracts have been the subject of recent controversy and renewed antitrust scrutiny. We demonstrate that a vertical environment where MFN clauses may be endogenously adopted shares equivalence properties with an environment where a final goods monopolist sells a good exhibiting negative consumption externalities directly to consumers and is faced with an exogenously imposed uniform pricing requirement. By leveraging these equivalence results, we are able to offer a new and useful framework for assessing the welfare effects of wholesale MFNs and which generates new insights.

Keywords: MFNs; Vertical; Foreclosure; Price discrimination (search for similar items in EconPapers)
JEL-codes: L42 L44 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11149-018-9371-0

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