Naked Exclusion with Private Offers

Jeanine Miklós-Thal and Greg Shaffer

American Economic Journal: Microeconomics, 2016, vol. 8, issue 4, 174-94

Abstract: We consider a seller's ability to deter potential entrants by offering exclusive contracts to downstream buyers. Previous literature has shown that this can be a profitable strategy if there is a coordination failure on the part of the buyers or if the seller can make discriminatory "divide-and-conquer" offers. This literature assumes that all offers are public. We show that if buyers cannot observe each other's offers and have passive or wary out-of-equilibrium beliefs, the divide-and-conquer exclusion strategy fails. Equilibria in which the incumbent obtains exclusion due to a coordination failure, on the other hand, exist for all out-of-equilibrium beliefs.

JEL-codes: D43 D83 D86 L13 L22 L40 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/mic.20150332
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Citations: View citations in EconPapers (8)

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