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Diagnosing Foreclosure due to Exclusive Dealing

Diagnosing Foreclosure due to Exclusive Dealing Exclusive dealing arrangements, in which a distributor agrees to work exclusively with a single manufacturer, can be efficiency enhancing or can be an anticompetitive means to foreclose markets. This paper evaluates the effect of exclusive distribution arrangements on competition in the Chicago beer market in 1994. A diagnostic test is provided to judge whether exclusive arrangements lead to foreclosure. To implement this test a model of consumer demand and firm behavior is estimated that incorporates industry details and allows for distribution through exclusive and shared channels. The test indicates that foreclosure effects are not present in this market. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Industrial Economics Wiley

Diagnosing Foreclosure due to Exclusive Dealing

The Journal of Industrial Economics , Volume 64 (3) – Sep 1, 2016

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References (56)

Publisher
Wiley
Copyright
© 2016 The Editorial Board of The Journal of Industrial Economics and John Wiley & Sons Ltd
ISSN
0022-1821
eISSN
1467-6451
DOI
10.1111/joie.12114
Publisher site
See Article on Publisher Site

Abstract

Exclusive dealing arrangements, in which a distributor agrees to work exclusively with a single manufacturer, can be efficiency enhancing or can be an anticompetitive means to foreclose markets. This paper evaluates the effect of exclusive distribution arrangements on competition in the Chicago beer market in 1994. A diagnostic test is provided to judge whether exclusive arrangements lead to foreclosure. To implement this test a model of consumer demand and firm behavior is estimated that incorporates industry details and allows for distribution through exclusive and shared channels. The test indicates that foreclosure effects are not present in this market.

Journal

The Journal of Industrial EconomicsWiley

Published: Sep 1, 2016

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