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  3. American Economic Journal: Microeconomics
  4. November 2016
  5. Naked Exclusion with Private Offers

Naked Exclusion with Private Offers

  • Jeanine Miklós-Thal
  • Greg Shaffer
American Economic Journal: Microeconomics
vol. 8, no. 4, November 2016
(pp. 174-94)
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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.

Citation

Miklós-Thal, Jeanine, and Greg Shaffer. 2016. "Naked Exclusion with Private Offers." American Economic Journal: Microeconomics, 8 (4): 174-94. DOI: 10.1257/mic.20150332

Additional Materials

JEL Classification

  • D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • D86 Economics of Contract: Theory
  • L13 Oligopoly and Other Imperfect Markets
  • L22 Firm Organization and Market Structure
  • L40 Antitrust Issues and Policies: General
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