Exclusive Quality

Argenton, Cédric

doi:10.2139/ssrn.1095674

Cited by 10 publications

(13 citation statements)

References 18 publications

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“…8 For extended models of exclusion with downstream competition, see Wright (2008), Argenton (2010), and Kitamura (2010Kitamura ( , 2011. Whereas these studies all show that the resulting exclusive contracts are anticompetitive, Gratz and Reisinger (2013) show potentially pro-competitive effects if downstream firms compete imperfectly and contract breaches are possible.…”

Section: Introductionmentioning

confidence: 99%

Exclusive contracts with complementary inputs

Kitamura

Matsushima

Sato

2018

International Journal of Industrial Organization

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThis study constructs a model of anticompetitive exclusive contracts in the presence of complementary inputs. A downstream firm transforms multiple complementary inputs into final products. When complementary input suppliers have market power, upstream competition within a given input market benefits not only the downstream firm (by lowering the input price) but also complementary input suppliers (by raising complementary input prices). The downstream firm is thus unable to earn higher profits even when socially efficient entry is allowed. Hence, the inefficient incumbent supplier can deter socially efficient entry by using exclusive contracts even in the absence of economies of scale and downstream competition. These results have important implications for antitrust agencies, showing the importance of considering the existence of complementary inputs when examining cases of potential anticompetitive exclusive dealing.JEL classifications code: L12, L41, L42.

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Section: Introductionmentioning

confidence: 99%

Exclusive contracts with complementary inputs

Kitamura

Matsushima

Sato

2018

International Journal of Industrial Organization

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“…2003) (en banc) (need not be). 2 For articles arguing that, like predatory pricing, loyalty discounts presumptively lower prices and cannot harm consumer welfare in the long run unless they are below cost, see Hovenkamp (2005) We prove that as long as the entrant's cost advantage is not too large and there are at least three buyers, loyalty discounts without buyer commitment will soften competition and increase prices above competitive levels, although they cannot completely exclude the entrant from the market. If the entrant and the incumbent choose prices simultaneously or if the incumbent acts as a Stackelberg-leader, the incumbent will never cover more than half the buyers using loyalty discounts without buyer commitment and both the entrant and the incumbent will have positive market-share with positive probability.…”

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confidence: 90%

Anticompetitive Market Division through Loyalty Discounts without Buyer Commitment

Elhauge¹,

Wickelgren

2012

SSRN Journal

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We show that loyalty discounts without buyer commitment create an externality among buyers because each buyer who signs a loyalty discount contract softens competition and raises prices for all buyers. This externality can enable an incumbent to use loyalty discounts to effectively divide the market with its rival and raise prices. We prove that, provided the entrant's cost advantage is not too large, with enough buyers, this externality implies that in any equilibrium some buyers sign loyalty discount contracts, segmenting the market and reducing consumer welfare and total welfare. These propositions are true even if the buyers coordinate, the entrant is more efficient, the loyalty discounts cover less than half the market, and all the loyalty discounts are above cost. We also prove that these propositions hold even if we assume no economies of scale, no downstream competition, no buyer switching costs, no financial constraints, no limits on rival expandability, and no intraproduct bundle of contestable and incontestable demand.JEL: C72, K0, K21, L12, L40, L41, L42

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“…That literature asks whether an incumbent monopoly can profitably use an exclusive contract to inefficiently deter entry. The models in Fumagalli and Motta (2006), Simpson and Wickelgren (2007), Wright (2008), Abito and Wright (2008), Argenton (2010), Doganoglu and Wright (2010), and Kitamura (2010Kitamura ( , 2011 have an incumbent monopoly and one or more potential entrants that produce identical or differentiated products and imperfect downstream competition, possibly with differentiation. Both they and we consider two-part tariffs, as a means of avoiding double marginalization problems.…”

Section: Introductionmentioning

confidence: 99%

Vertical Contracts and Mandatory Universal Distribution

Karp¹,

Perloff²

2013

The B.E. Journal of Economic Analysis & Policy

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An upstream monopoly that provides a new good to a downstream oligopoly might prefer to sell to a single rather than to multiple downstream firms. For example, Apple initially sold its iPhone through one vendor. If a monopoly uses a single vendor, the government may impose a mandatory universal distribution (MUD) requirement that forces the monopoly to sell to all downstream vendors. However, if the income elasticity of demand for the new good is greater than the income elasticity of the existing generic good, the MUD requirement leads to a higher equilibrium price for both the new good and the generic and lowers consumer welfare.

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Exclusive Quality

Cited by 10 publications

References 18 publications

Exclusive contracts with complementary inputs

Exclusive contracts with complementary inputs

Anticompetitive Market Division through Loyalty Discounts without Buyer Commitment

Vertical Contracts and Mandatory Universal Distribution

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