Exclusivity and exclusion on platform Markets

Subhasish Chowdhury and Stephen Martin ()

Journal of Economics, 2017, vol. 120, issue 2, No 1, 95-118

Abstract: Abstract We examine conditions under which an exclusive license granted by the upstream producer of a component that some consumers regard as essential to one of two potential suppliers of a downstream platform market can make the unlicensed supplier unprofitable, although both firms would be profitable if both were licensed. If downstream varieties are close substitutes, an exclusive license need not be exclusionary. If downstream varieties are highly differentiated, an exclusive license is exclusionary, but it is not in the interest of the upstream firm to grant an exclusive license. For intermediate levels of product differentiation, an exclusive license is exclusionary and maximizes the upstream firm’s payoff.

Keywords: Exclusion; Essential components; Exclusive contract; Platform market (search for similar items in EconPapers)
JEL-codes: L12 L13 L22 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (8)

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Working Paper: Exclusivity and Exclusion on Platform Markets (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:120:y:2017:i:2:d:10.1007_s00712-016-0499-z

DOI: 10.1007/s00712-016-0499-z

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