Naked Exclusion: An Experimental Study of Contracts with Externalities

Claudia Landeo and Kathryn E. Spier

American Economic Review, 2009, vol. 99, issue 5, 1850-77

Abstract: This paper reports the results of an experiment on exclusive contracts. We replicate the strategic environment described by Rasmusen, Ramseyer, and Wiley (1991) and Segal and Whinston (2000). Our findings are as follows. First, when the buyers can communicate, discrimination raises the likelihood of exclusion. Second, when the incumbent seller is unable to discriminate and must make the same offers to the buyers, communication reduces the likelihood of exclusion. Communication also induces more generous offers when the seller cannot discriminate, and divide-and-conquer offers when the seller can discriminate. Third, when communication is allowed, payoff endogeneity increases the likelihood of exclusion. (JEL C72, C91, D62, D86, K12, K21, L12, L42)

JEL-codes: C72 C91 D62 D86 K12 K21 L12 (search for similar items in EconPapers)
Date: 2009
Note: DOI: 10.1257/aer.99.5.1850
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Citations: View citations in EconPapers (57)

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Working Paper: Naked Exclusion: An Experimental Study of Contracts with Externalities (2008)
Working Paper: Naked Exclusion: An Experimental Study of Contracts with Externalities (2007)
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