Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81143
Authors: 
Fumagalli, Chiara
Motta, Massimo
Persson, Lars
Year of Publication: 
2007
Series/Report no.: 
IFN Working Paper 718
Abstract: 
We extend the literature on exclusive dealing, which assumes that entry can occur only by installing new capacity, by allowing the incumbent and the potential entrant to merge. This uncovers new effects. First, exclusive deals can be used to improve the incumbent's bargaining position in the merger negotiation. Second, the incumbent finds it easier to elicit the buyer's acceptance. Third, exclusive dealing, despite allowing the more efficient technology to find its way into the industry, reduces welfare because (i) it may trigger entry through merger whereas independent entry would be socially optimal, (ii) it leads to a sub-optimal contractual price when the exclusive dealing include a price commitment, (iii) it may deter entry altogether.
Subjects: 
Technology Transfer
Inefficient Entry
Antitrust
Authority's Behavior
JEL: 
L24
L42
Document Type: 
Working Paper

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