Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Wednesday, January 20, 2010

Exclusive Dealing: The Interaction between Foreclosure and Investment Promotion

Posted by D. Daniel Sokol

Chiara Fumagalli (Bocconi University), Massimo Motta (Bologna University), and Thomas Rønde (Copenhagen Business School)  analyze Exclusive Dealing: The Interaction between Foreclosure and Investment Promotion.

ABSTRACT: This paper studies a model where exclusive dealing (ED) can both promote investment and foreclose a more efficient supplier. While investment promotion is usually regarded as a pro-competitive effect of ED, our paper shows that it may be the very reason why a contract that forecloses a more efficient supplier is signed. Absent the effect on investment, the contract would not be signed and foreclosure would not be a concern. For this reason, considering potential foreclosure and investment promotion in isolation and then summing them up may not be a suitable approach to assess the net effect of ED. The paper therefore invites a more cautious attitude towards accepting possible investment promotion arguments as a defence for ED.

http://lawprofessors.typepad.com/antitrustprof_blog/2010/01/exclusive-dealing-the-interaction-between-foreclosure-and-investment-promotion.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef012876ea4037970c

Listed below are links to weblogs that reference Exclusive Dealing: The Interaction between Foreclosure and Investment Promotion:

Comments

Post a comment