American Economic Review Vol. 105 No. 11 2015

Exclusive Contracts and Market Dominance

Giacomo Calzolari¹; Vincenzo Denicolò²

¹ Department of Economics, University of Bologna, Piazza Scaravilli 2, 40126 Bologna, Italy, and CEPR (e-mail: ) · ² Department of Economics, University of Leicester, University Road, Leicester LE1 7RH, UK, University of Bologna, and CEPR (e-mail: )

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.

DOI

10.1257/aer.20131664

Volume

105

Issue

11

Pages

3321-3351

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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