Exclusive Contracts and Market Dominance

Giacomo Calzolari () and Vincenzo Denicolo' ()

American Economic Review, 2015, vol. 105, issue 11, 3321-51

Abstract: We propose a new theory of exclusive dealing. The theory is based on the assumption that a dominant firm has a competitive advantage over its rivals, and that the buyers' willingness to pay for the product is private information. In this setting, the dominant firm can impose contractual restrictions on buyers without necessarily compensating them, implying that exclusive dealing contracts can be both profitable and anticompetitive. We discuss the general implications of the theory for competition policy and illustrate by examples its applicability to antitrust cases. (JEL D21, D43, D82, D86, K21, L13, L40)

JEL-codes: D21 D43 D82 D86 K21 L13 L40 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.20131664
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Citations: View citations in EconPapers (33)

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