Exclusive Dealing and Price Promotions

Rajiv Lal and J. Miguel Villas-Boas

The Journal of Business, 1996, vol. 69, issue 2, 159-72

Abstract: The authors study retail price promotions and manufacturer trade deals in markets with exclusive dealing. They find that models that do not account for the existence of retailers overestimate the depth of promotions. The authors then compare the price promotions outcomes of markets with and without exclusive dealing. They also evaluate whether exclusive dealing can be an equilibrium outcome and find that, under certain conditions of the model, the equilibrium is for manufacturers to distribute through several retailers, even though their profits might end up lower than if each retailer carried only one product. Copyright 1996 by University of Chicago Press.

Date: 1996
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