American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Exclusive Contracts and Market Dominance
American Economic Review
(pp. 3321–51)
Abstract
We propose a new theory of exclusive dealing. The theory is based on the assumption that a dominant firm has a competitive advantage over its rivals, and that the buyers' willingness to pay for the product is private information. In this setting, the dominant firm can impose contractual restrictions on buyers without necessarily compensating them, implying that exclusive dealing contracts can be both profitable and anticompetitive. We discuss the general implications of the theory for competition policy and illustrate by examples its applicability to antitrust cases. (JEL D21, D43, D82, D86, K21, L13, L40)Citation
Calzolari, Giacomo, and Vincenzo Denicolò. 2015. "Exclusive Contracts and Market Dominance." American Economic Review 105 (11): 3321–51. DOI: 10.1257/aer.20131664Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- D82 Asymmetric and Private Information; Mechanism Design
- D86 Economics of Contract: Theory
- K21 Antitrust Law
- L13 Oligopoly and Other Imperfect Markets
- L40 Antitrust Issues and Policies: General