Exclusive Dealing Contracts by Distributors

Ryoko Oki and Noriyuki Yanagawa
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Ryoko Oki: Graduate School of Economics, University of Tokyo
Noriyuki Yanagawa: Faculty of Economics, University of Tokyo

No CIRJE-F-789, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: The existing literature about exclusive dealing contracts has focused on cases where an incumbent manufacturer o¤ers exclusive contracts to deter an entry. In contrast, we consider the case where an incumbent distributor o¤ers exclusive dealing contracts to deter an entry. Exclusive dealing contracts by a distributor are less e¤ective. We will show that the outcome of such contracts is quite di¤erent from the outcomes in the traditional literature. If the number of manufacturers is su¢ ciently high, it is impossible to exclude an e¢ cient entry. Furthermore, if we allow two- part tari¤ contracts, the entrant distributor can enter the market for any number of manufacturers.

Pages: 22pages
Date: 2011-03
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2011cf789

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