Exclusive Dealing and Vertical Integration in Interlocking Relationships

Patrick Rey and Volker Nocke

No 10176, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We develop a model of interlocking bilateral relationships between upstream firms (manufacturers) that produce differentiated goods and downstream firms (retailers) that compete imperfectly for consumers. Contract offers and acceptance decisions are private information to the contracting parties. We show that both exclusive dealing and vertical integration between a manufacturer and a retailer lead to vertical foreclosure, to the detriment of consumers and society. Finally, we show that firms have indeed an incentive to sign such contracts or to integrate vertically.

Keywords: Bilateral contracting; Exclusive dealing; Foreclosure; Vertical merger; Vertical relations (search for similar items in EconPapers)
JEL-codes: D43 L13 L42 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-com, nep-cta and nep-mic
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Exclusive dealing and vertical integration in interlocking relationships (2018)
Working Paper: Exclusive dealing and vertical integration in interlocking relationships (2018)
Working Paper: Exclusive Dealing and Vertical Integration in Interlocking Relationships (2018)
Working Paper: Exclusive Dealing and Vertical Integration in Interlocking Relationships (2014)
Working Paper: Exclusive dealing and vertical integration in interlocking relationships (2014)
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