Monopolization with Must-Haves

Enrique Ide and Juan-Pablo Montero

American Economic Journal: Microeconomics, 2024, vol. 16, issue 3, 284-320

Abstract: An increasing number of monopolization cases have been constructed around the notion of "must-have" items: products that distributors must carry to "compete effectively." Motivated by these cases, we consider a multiproduct setting where upstream suppliers sell their products through competing distributors offering one-stop-shopping convenience to consumers. We show the emergence of products that distributors cannot afford not to carry if their rivals do. A supplier of such products can exploit this must-have property, along with tying and exclusivity provisions, to monopolize adjacent, otherwise-competitive markets. Policy interventions that ban tying or exclusivity provisions may prove ineffective or even backfire.

JEL-codes: D43 K21 L13 L14 L42 L81 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/mic.20230018

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