Exclusive dealing and compatibility of investments

Chrysovalantou Milliou

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We examine a final product manufacturer's incentives to engage in exclusive dealing with an input supplier when both market sides invest in quality and bargain over their trading terms. Taking into account that the investments' compatibility can be higher under exclusive dealing we find, in contrast to previous literature, that bargaining power distribution plays a crucial role both for investment incentives and for incentives to adopt exclusive dealing. We also find that there exist cases in which although investments are higher under exclusive dealing, the manufacturer chooses non-exclusive dealing. Our welfare analysis indicates that the manufacturer's choice of exclusive dealing in equilibrium is never welfare detrimental.

Date: 2004-10
New Economics Papers: this item is included in nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://e-archivo.uc3m.es/rest/api/core/bitstreams ... 95d10c37f9a9/content (application/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:cte:werepe:we044919

Access Statistics for this paper

More papers in UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía
Bibliographic data for series maintained by Ana Poveda ().