Exclusive Dealing: The Interaction between Foreclosure and Investment Promotion

Chiara Fumagalli, Massimo Motta () and Thomas Ronde

No 56213, Institutions and Markets Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: This paper studies a model where exclusive dealing (ED) can both promote investment and foreclose a more efficient supplier. While investment promotion is usually regarded as a pro-competitive effect of ED, our paper shows that it may be the very reason why a contract that forecloses a more efficient supplier is signed. Absent the effect on investment, the contract would not be signed and foreclosure would not be a concern. For this reason, considering potential foreclosure and investment promotion in isolation and then summing them up may not be a suitable approach to assess the net effect of ED. The paper therefore invites a more cautious attitude towards accepting possible investment promotion arguments as a defence for ED.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 39
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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https://ageconsearch.umn.edu/record/56213/files/120-09.pdf (application/pdf)

Related works:
Working Paper: Exclusive dealing: the interaction between foreclosure and investment promotion (2009)
Working Paper: Exclusive Dealing: The Interaction between Foreclosure and Investment Promotion (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:feemim:56213

DOI: 10.22004/ag.econ.56213

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