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Article
Naked Exclusion, Efficient Breach, and Downstream Competition
American Economic Review (2007)
  • John Simpson
  • Abraham L. Wickelgren, Northwestern University
Abstract
Previous papers by Eric B. Rasmusen et. al. (1991) and Ilya R. Segal and Michael D. Whinston (2000) argue that exclusive contracts can inefficiently deter entry in the presence of scale economies and multiple buyers. We first show that these results no longer hold when buyers are final consumers who can breach these contracts and pay expectation damages. We then show, however, that exclusive contracts can inefficiently deter entry if buyers are downstream competitors, even in the absence of scale economies and even if breach is possible.
Keywords
  • Exclusive Dealing
Disciplines
Publication Date
September, 2007
Publisher Statement
Copyright American Economic Association
Citation Information
John Simpson and Abraham L. Wickelgren. "Naked Exclusion, Efficient Breach, and Downstream Competition" American Economic Review Vol. 97 (2007)
Available at: http://works.bepress.com/abraham_wickelgren/2/