Do exclusivity arrangements harm consumers?

Jihui Chen () and Qiang Fu ()
Additional contact information
Jihui Chen: Illinois State University
Qiang Fu: National University of Singapore

Journal of Regulatory Economics, 2017, vol. 51, issue 3, No 3, 339 pages

Abstract: Abstract This paper explores the ramifications of exclusivity arrangements, e.g., iPhone’s partnership with wireless carriers, for market competition and consumer welfare. Two firms compete in a primary good market, and a monopolistic firm offers a value-adding good. The primary good can be consumed alone, while the value-adding good must be consumed with the primary good. The monopolistic firm forms an exclusivity partnership with one of the primary good providers. Buyers are able to consume the value-adding good only if they patronize the monopolistic firm’s exclusive partner. This practice allows the monopolistic firm to extract surplus from the primary good market. Surprisingly, consumers benefit from the exclusivity arrangement. However, overall social welfare declines, despite improvements to consumer welfare.

Keywords: Exclusivity; Consumer welfare; Market efficiency; Hotelling; Two-part pricing (search for similar items in EconPapers)
JEL-codes: L1 L2 L4 L5 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11149-017-9325-y Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:regeco:v:51:y:2017:i:3:d:10.1007_s11149-017-9325-y

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11149/PS2

DOI: 10.1007/s11149-017-9325-y

Access Statistics for this article

Journal of Regulatory Economics is currently edited by Menaham Spiegel

More articles in Journal of Regulatory Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().