The Competitive Consequences of Most-Favored-Nation Provisions

Posted by D. Daniel Sokol

Jonathan B. Baker, American University - Washington College of Law and Judith A. Chevalier, Yale School of Management explain The Competitive Consequences of Most-Favored-Nation Provisions.

ABSTRACT: "Most Favored Nation" contractual provisions have come under scrutiny in recent years by antitrust authorities in both the US and EU. MFNs are a type of vertical agreement between suppliers and buyers. The literature has recognized that there may be efficiency rationales for these arrangements but the literature has also recognized that these arrangements have anticompetitive potential. In this paper, we distill the economics literature on MFNs to explore both possibilities.