A Buyer Power Theory of Exclusive Dealing and Exclusionary Bundling

Claire Chambolle () and Hugo Molina
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Claire Chambolle: UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: We develop a unified theory of exclusive dealing and exclusionary bundling. In a framework with two competing manufacturers which supply their product(s) through a monopolist retailer, we show that buyer power restores the profitability of such practices involving inefficient exclusion. The mechanism underlying this exclusion is that the compensation required by the retailer to renounce selling the rival product erodes with its buyer power. Among others, we further show that our theory holds when the buyer power differs across manufacturers or when the retailer can strategically narrow (or expand) its product assortment.

Keywords: Vertical relations; Buyer power; Exclusive dealing; Exclusionary Bundling; Nash-in-Nash bargaining with Threat of Replacement (search for similar items in EconPapers)
Date: 2023-08-01
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Published in American Economic Journal: Microeconomics, 2023, 15 (3), pp.166-200. ⟨10.1257/mic.20210191⟩

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Journal Article: A Buyer Power Theory of Exclusive Dealing and Exclusionary Bundling (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03231803

DOI: 10.1257/mic.20210191

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