Exclusive dealing and vertical integration in interlocking relationships

Volker Nocke and Patrick Rey

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Abstract: We develop a model of interlocking bilateral relationships between upstream manufacturers that produce differentiated goods and downstream 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, at the detriment of consumers and society. Finally, we show that firms have indeed an incentive to sign such contracts or to integrate vertically.

Keywords: Vertical relations; Exclusive dealing; Vertical merger; Foreclosure; Bilateral contracting (search for similar items in EconPapers)
Date: 2018-09
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-02621675v1
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Citations: View citations in EconPapers (14)

Published in Journal of Economic Theory, 2018, 177, pp.183-221. ⟨10.1016/j.jet.2018.06.003⟩

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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 (2014)
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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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02621675

DOI: 10.1016/j.jet.2018.06.003

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