A Buyer Power Theory of Exclusive Dealing and Exclusionary Bundling
American Economic Journal: Microeconomics
vol. 15,
no. 3, August 2023
(pp. 166-200)
Abstract
We develop a unified theory of exclusive dealing and exclusionary bundling. In a framework with two competing manufacturers that supply their product(s) through a monopolist retailer, we show that buyer power restores the profitability of such practices involving inefficient exclusion. The mechanism underlying this exclusion is that the compensation required by the retailer to renounce selling the rival product erodes with its buyer power. We further show that our theory holds when buyer power differs across manufacturers or when the retailer can strategically narrow (or expand) its product assortment.Citation
Chambolle, Claire, and Hugo Molina. 2023. "A Buyer Power Theory of Exclusive Dealing and Exclusionary Bundling." American Economic Journal: Microeconomics, 15 (3): 166-200. DOI: 10.1257/mic.20210191Additional Materials
JEL Classification
- D42 Market Structure, Pricing, and Design: Monopoly
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- K21 Antitrust Law
- L42 Vertical Restraints; Resale Price Maintenance; Quantity Discounts
- L60 Industry Studies: Manufacturing: General
- L81 Retail and Wholesale Trade; e-Commerce
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