American Economic Journal: Microeconomics
no. 3, August 2023
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.
Chambolle, Claire, and Hugo Molina.
"A Buyer Power Theory of Exclusive Dealing and Exclusionary Bundling."
American Economic Journal: Microeconomics,
Market Structure, Pricing, and Design: Monopoly
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Vertical Restraints; Resale Price Maintenance; Quantity Discounts
Industry Studies: Manufacturing: General
Retail and Wholesale Trade; e-Commerce