The existing literature about exclusive dealing contracts has focused on cases
where an incumbent manufacturer offers exclusive contracts to deter an entry. In
contrast, we consider the case where an incumbent distributor offers exclusive dealing
contracts to deter an entry. Exclusive dealing contracts by a distributor are less
effective. We will show that the outcome of such contracts is quite different from the
outcomes in the traditional literature. If the number of manufacturers is sufficiently
high, it is impossible to exclude an efficient entry. Furthermore, if we allow two-
part tariff contracts, the entrant distributor can enter the market for any number of
manufacturers.
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