@inproceedings{Wohlschlegel2010Loyalty,
abstract = {Wholesale contracts with loyalty-rewarding pricing schemes are of particular concern in legal cases of abuse of market power. Competition authorities complain that an incumbent manufacturer may use the lock-in effect of such long-term contracts with a retailer to impede subsequent entry or even prevent it. This paper analyzes an incumbent manufacturer using a long-term contract to shift rent from an entrant who can produce only in later periods. If contracts can only be made contingent on total own quantities, the incumbent's pre-entry (post-entry) quantity will be excessive (inefficiently small) even under the otherwise most general set of contracts. The model permits the analysis of simple pricing schemes widely used in practice. In particular, I show that all-unit discounts outperform incremental discounts both from the incumbent's and a social point of view, although competition authorities tend to take a more skeptical view towards the former.},
address = {Frankfurt a. M.},
author = {Ansgar Wohlschlegel},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {D80; K21; L42; 330; Abuse of Market Dominance; Discounts; Exclusive Dealing},
language = {eng},
number = {F8-V1},
publisher = {Verein f\"{u}r Socialpolitik},
series = {Beitr\"{a}ge zur Jahrestagung des Vereins f\"{u}r Socialpolitik 2010: \"{O}konomie der Familie - Session: Regulation and Pricing Policies},
title = {Loyalty-Rewarding Pricing Schemes: Contract Space and Rent Shifting},
url = {http://hdl.handle.net/10419/37495},
year = {2010}
}
