Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Naked Exclusion with Private Offers †

Naked Exclusion with Private Offers † Abstract We consider a seller's ability to deter potential entrants by offering exclusive contracts to downstream buyers. Previous literature has shown that this can be a profitable strategy if there is a coordination failure on the part of the buyers or if the seller can make discriminatory “divide-and-conquer” offers. This literature assumes that all offers are public. We show that if buyers cannot observe each other's offers and have passive or wary out-of-equilibrium beliefs, the divide-and-conquer exclusion strategy fails. Equilibria in which the incumbent obtains exclusion due to a coordination failure, on the other hand, exist for all out-of-equilibrium beliefs. (JEL D43, D83, D86, L13, L22, L40 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

Loading next page...
 
/lp/american-economic-association/naked-exclusion-with-private-offers-KeefMkHQH9
Publisher
American Economic Association
Copyright
Copyright © 2016 by the American Economic Association
Subject
Articles
ISSN
1945-7685
eISSN
1945-7685
DOI
10.1257/mic.20150332
Publisher site
See Article on Publisher Site

Abstract

Abstract We consider a seller's ability to deter potential entrants by offering exclusive contracts to downstream buyers. Previous literature has shown that this can be a profitable strategy if there is a coordination failure on the part of the buyers or if the seller can make discriminatory “divide-and-conquer” offers. This literature assumes that all offers are public. We show that if buyers cannot observe each other's offers and have passive or wary out-of-equilibrium beliefs, the divide-and-conquer exclusion strategy fails. Equilibria in which the incumbent obtains exclusion due to a coordination failure, on the other hand, exist for all out-of-equilibrium beliefs. (JEL D43, D83, D86, L13, L22, L40 )

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Nov 1, 2016

There are no references for this article.