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| Author: | Fumagalli, C. Motta, M. Persson, L. |
| Title: | On the anticompetitive effect of exclusive dealing when entry by merger is possible |
| Journal: | Journal of Industrial Economics
2009 : DEC, VOL. 57:4, p. 785-811 |
| Index terms: | competition contracts consolidation mergers negotiation |
| Language: | eng |
| Abstract: | We extend the literature on exclusive dealing by allowing the merger between the incumbent and the potential entrant, uncovering new effects. First, exclusive dealing can be utilized to improve the incumbent's bargaining position in the merger negotiation phase. Second, the incumbent sees it easier to elicit the buyer's acceptance of exclusivity. Third, despite allowing more efficient technology enter the industry, exclusive dealing reduces welfare because (i) it may trigger entry through merger when independent entry would be socially optimal and (ii) it can deter entry altogether. |
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