Citation

Discussion Paper Details

Please find the details for DP9545 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Exclusive contracts and market dominance

Author(s): Giacomo Calzolari and Vincenzo Denicolò

Publication Date: July 2013

Keyword(s): Dominant firm, Exclusive dealing and Non-linear pricing

Programme Area(s): Industrial Organization

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.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9545

Bibliographic Reference

Calzolari, G and Denicolò, V. 2013. 'Exclusive contracts and market dominance'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9545