2006–2010

On the Anticompetitive Effect of Exclusive Dealing when Entry by Merger is Possible

Reprint No. 2009:42

Author(s): Chiara Fumagalli, Massimo Motta and Lars PerssonYear: 2009 Title: Journal of Industrial Economics Volume (No.): 57 (4) Pages: 785–811
Online article (restrictions may apply)


We extend the literature on exclusive dealing by allowing the incumbent and the potential entrant to merge. This uncovers new effects. First, exclusive dealing can be used to improve the incumbent’s bargaining position in the merger negotiation. Second, the incumbent finds it easier to elicit the buyer’s acceptance of exclusivity. Third, despite allowing the more efficient technology to find its way into the industry, exclusive dealing reduces welfare because (i) it may trigger entry through merger whereas independent entry would be socially optimal and (ii) it may deter entry altogether.


Reference:
Fumagalli, Chiara, Massimo Motta and Lars Persson (2009), "On the Anticompetitive Effect of Exclusive Dealing when Entry by Merger is Possible". Journal of Industrial Economics 57(4), 785–811.

Lars Persson

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An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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