Exclusive contracts and demand foreclosure

David Spector

Post-Print from HAL

Abstract: A firm may induce some customers to sign exclusive contracts in order to deprive a rival of the minimum viable size, exclude it from the market, and enjoy increased market power. This strategy may result in socially inefficient exclusion even if the excluded firm is present at the contracting stage and can make counteroffers. In addition, allowing for breach penalty clauses decreases firms' incentives to exclude rivals, because such clauses allow a firm to use customers as a conduit for the transfer of another firm's profits.

Keywords: Exclusive contract; Firm; Antitrust policy (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (21)

Published in The RAND Journal of Economics, 2011, 42 (4), pp.619-638. ⟨10.1111/j.1756-2171.2011.00147.x⟩

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Journal Article: Exclusive contracts and demand foreclosure (2011)
Working Paper: Exclusive contracts and demand foreclosure (2011)
Working Paper: Exclusive contracts and demand foreclosure (2007)
Working Paper: Exclusive contracts and demand foreclosure (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00659072

DOI: 10.1111/j.1756-2171.2011.00147.x

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