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Xulia González and Daniel Miles
''Estimating complementarity among vertical restraints: Evidence from manufacturing firms''
( 2011, Vol. 31 No.4 )
This paper uses a bivariate probit model to analyze firms' decisions to impose regimes of exclusive dealing and/or exclusive territories with their distributors. We employ a panel data set of manufacturing firms (from 1990 to 2005) that contains information about such vertical restraints. Firms report whether they impose vertical restraints on their distributors (retailers or wholesalers) and the type: resale price maintenance, full line forcing, exclusive dealing, and/or exclusive territories. Our results show that the likelihood of imposing exclusive dealing and/or exclusive territories varies widely by industry and that small size greatly reduces the likelihood of imposing exclusive dealing (but not exclusive territories). The results also show the existence of complementarities between exclusive territories and exclusive dealing but not with other types of restraint.
Keywords: vertical restraints, exclusive dealing, exclusive territories, manufacturing industry
JEL: L4 - Antitrust Issues and Policies: General
L6 - Industry Studies: Manufacturing: General
Manuscript Received : Feb 25 2011 Manuscript Accepted : Dec 12 2011

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