Wednesday, November 23, 2016

Diagnosing Foreclosure Due to Exclusive Dealing

John Asker, UCLA is Diagnosing Foreclosure Due to Exclusive Dealing.

ABSTRACT: Exclusive dealing arrangements, in which a distributor agrees to work exclusively with a single manufacturer, can be efficiency enhancing or can be an anticompetitive means to foreclose markets. This paper evaluates the effect of exclusive distribution arrangements on competition in the Chicago beer market in 1994. A diagnostic test is provided to judge whether exclusive arrangements lead to foreclosure. To implement this test a model of consumer demand and firm behavior is estimated that incorporates industry details and allows for distribution through exclusive and shared channels. The test indicates that foreclosure effects are not present in this market.

| Permalink


Post a comment