Exclusive Dealing and Vertical Integration in Interlocking Relationships

Nocke, Volker and Rey, Patrick (2018) Exclusive Dealing and Vertical Integration in Interlocking Relationships. Journal of Economic Theory, vol. 177. pp. 183-221.

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Official URL: http://tse-fr.eu/pub/32735

Abstract

We develop a model of interlocking bilateral relationships between upstream manufacturers that produce differentiated goods and downstream retailers that compete imperfectly for consumers. Contract offers and acceptance decisions are private information to the contracting parties. We show that both exclusive dealing and vertical integration between a manufacturer and a retailer lead to vertical foreclosure, at the detriment of consumers and society. Finally, we show that firms have indeed an incentive to sign such contracts or to integrate vertically.

Item Type: Article
Language: English
Date: September 2018
Refereed: Yes
Uncontrolled Keywords: vertical relations, exclusive dealing, vertical merger, foreclosure, bilateral contracting
JEL codes: D43 - Oligopoly and Other Forms of Market Imperfection
L13 - Oligopoly and Other Imperfect Markets
L42 - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 22 Jun 2018 15:34
Last Modified: 11 Jul 2019 13:10
OAI ID: oai:tse-fr.eu:32735
URI: http://publications.ut-capitole.fr/id/eprint/26095

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