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Noriyuki Yanagawa and Ryoko Oki
''Exclusive dealing contract and inefficient entry threat.''
( 2010, Vol. 30 No.3 )
This paper examines the effects of exclusive dealing contracts offered by an incumbent distributor to an incumbent manufacturer with entrants in both manufacturing and distribution sectors. It is well-known that a potential entry threat is welfare increasing under homogenous price competition, even though the potential entrant is less productive. This paper reexamines this intuition. We show that the entry threat of a less-productive manufacturer is welfare decreasing when there is an exclusive dealing contract between the incumbent manufacturer and distributor.
Keywords: Exclusive Dealing, Entry Threat, Vertical Restraint, Antitrust
JEL: L4 - Antitrust Issues and Policies: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Jul 14 2010 Manuscript Accepted : Sep 23 2010

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