TY - JOUR
T1 - Exclusive contracts with complementary inputs
AU - Kitamura, Hiroshi
AU - Matsushima, Noriaki
AU - Sato, Misato
N1 - Funding Information:
We thank the Co-Editor—Giacomo Calzolari—and two anonymous referees for their constructive comments and suggestions. We also thank Yuki Amemiya, Eric Avenel, Chiara Fumagalli, Toshihiro Matsumura, Patrick Rey, Dan Sasaki, and Tetsuya Shinkai for their insightful comments, which greatly assisted the research. For the helpful discussions and expertise, we appreciate the help of Zhijun Chen, Akifumi Ishihara, Akira Ishii, Bruno Jullien, Akihiko Nakagawa, Tatsuhiko Nariu, Ryoko Oki, Noriyuki Yanagawa, and the conference participants at APIOC 2016 (University of Melbourne), EARIE 2014 (Bocconi University), the Japanese Economic Association (Seinan Gakuin University), and Japan Association for Applied Economics (Hiroshima University), as well as the seminar participants at Kwansei Gakuin University, Kyoto University, Kyoto Sangyo University, Nagoya University, Osaka University, Université Catholique de Louvain, The University of Rennes 1, and Yokohama National University. Finally, we thank Shohei Yoshida for his research assistance. The second author is grateful for the warm hospitality at MOVE, Universitat Autònoma de Barcelona, where part of this paper was written, and acknowledges the financial support from the “Strategic Young Researcher Overseas Visits Program for Accelerating Brain Circulation” of JSPS. We gratefully acknowledge the financial support from JSPS KAKENHI Grant Numbers JP22243022 , JP24530248 , JP24730220 , JP15H03349 , JP15H05728 , JP15K17060 , JP17H00984 , JP17J03400 , and JP17K13729 , and the program of the Joint Usage/Research Center for Behavioral Economics at ISER, Osaka University. The usual disclaimer applies.
Publisher Copyright:
© 2017 Elsevier B.V.
Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2018/1
Y1 - 2018/1
N2 - This study constructs a model of anticompetitive exclusive contracts in the presence of complementary inputs. A downstream firm transforms multiple complementary inputs into final products. When complementary input suppliers have market power, upstream competition within a given input market benefits not only the downstream firm, but also the complementary input suppliers, by raising complementary input prices. Thus, the downstream firm is unable to earn higher profits, even when socially efficient entry is allowed. Hence, the inefficient incumbent supplier can deter socially efficient entry by using exclusive contracts, even in the absence of scale economies, downstream competition, and relationship-specific investment.
AB - This study constructs a model of anticompetitive exclusive contracts in the presence of complementary inputs. A downstream firm transforms multiple complementary inputs into final products. When complementary input suppliers have market power, upstream competition within a given input market benefits not only the downstream firm, but also the complementary input suppliers, by raising complementary input prices. Thus, the downstream firm is unable to earn higher profits, even when socially efficient entry is allowed. Hence, the inefficient incumbent supplier can deter socially efficient entry by using exclusive contracts, even in the absence of scale economies, downstream competition, and relationship-specific investment.
KW - Antitrust policy
KW - Complementary inputs
KW - Exclusive dealing
KW - Multiple inputs
UR - http://www.scopus.com/inward/record.url?scp=85039155151&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85039155151&partnerID=8YFLogxK
U2 - 10.1016/j.ijindorg.2017.11.005
DO - 10.1016/j.ijindorg.2017.11.005
M3 - Article
AN - SCOPUS:85039155151
VL - 56
SP - 145
EP - 167
JO - International Journal of Industrial Organization
JF - International Journal of Industrial Organization
SN - 0167-7187
ER -