Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Friday, July 26, 2013

Exclusive Contracts and Market Dominance

Posted by D. Daniel Sokol

Giacomo Calzolari, University of Bologna and Vincenzo Denicolo, University of Bologna analyze Exclusive Contracts and Market Dominance.

ABSTRACT: We develop a theory of exclusive dealing that rehabilitates pre-Chicago-school analyses. Our theory rests on two realistic assumptions: that firms are imperfectly informed about demand, and that a dominant firm has a competitive advantage over its rivals. Under those assumptions, exclusive contracts tend to be pro-competitive when the dominant firm's competitive advantage is small, but are anti-competitive when it is more pronounced. In this latter case, the dominant firm uses exclusivity clauses as a means to increase its market share and profit, without necessarily driving its rivals out of the market, or impeding their entry. We discuss the implications of these results for competition policy.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/07/exclusive-contracts-and-market-dominance.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef01910440fdf0970c

Listed below are links to weblogs that reference Exclusive Contracts and Market Dominance:

Comments

Post a comment