A Buyer Power Theory of Exclusive Dealing and Exclusionary Bundling

Claire Chambolle and Hugo Molina

American Economic Journal: Microeconomics, 2023, vol. 15, issue 3, 166-200

Abstract: We develop a unified theory of exclusive dealing and exclusionary bundling. In a framework with two competing manufacturers that supply their product(s) through a monopolist retailer, we show that buyer power restores the profitability of such practices involving inefficient exclusion. The mechanism underlying this exclusion is that the compensation required by the retailer to renounce selling the rival product erodes with its buyer power. We further show that our theory holds when buyer power differs across manufacturers or when the retailer can strategically narrow (or expand) its product assortment.

JEL-codes: D42 D43 K21 L42 L60 L81 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1257/mic.20210191

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