Naked exclusion with heterogeneous buyers

0567489 - NHU-C 2023 CZ eng V - Research Report
Chen, Y. - Zápal, Jan
Naked exclusion with heterogeneous buyers.
Prague: CERGE-EI, 2022. 28 s. CERGE-EI Working Paper Series, 741. ISSN 2788-0443
Institutional support: Cooperatio-COOP
Keywords : contracting with externalities * exclusionary contracts * buyer heterogeneity
OECD category: Applied Economics, Econometrics
https://www.cerge-ei.cz/pdf/wp/Wp741.pdf

We investigate the effects of buyer heterogeneity in a market in which an incumbent firm prevents entry when it signs enough exclusionary contracts with buyers. With heterogeneous buyers several well-known results in exclusionary contracting with homogenous buyers are overturned and novel ones emerge. First, inefficient equilibria exist in which exclusionary contracts are signed but entry still occurs, and the loss of consumer surplus falls on small buyers. Second, sequential contracting may be more pro-competitive than simultaneous contracting in the sense that entry occurs under sequential but not simultaneous contracting. When this happens, sequential Pareto dominates simultaneous contracting.
Permanent Link: https://hdl.handle.net/11104/0338737