Naked Exclusion , E ffi cient Breach , and Downstream Competition

  title={Naked Exclusion , E ffi cient Breach , and Downstream Competition},
  author={John Simpson and Abraham L. Wickelgren},
Previous papers by Eric B. Rasmusen et. al. (1991) and Ilya R. Segal and Michael D. Whinston (2000) argue that exclusive contracts can inefficiently deter entry in the presence of scale economies and multiple buyers. We first show that these results no longer hold when buyers are final consumers who can renegotiate these contracts or breach them and pay expectation damages. We then show, however, that exclusive contracts can inefficiently deter entry if buyers are downstream competitors, even… CONTINUE READING

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