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

Contact

Ph: +46 8 665 4504
lars.persson@ifn.se

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Social Capital and Health

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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