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Monopolization with Must-Haves

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  • Enrique Ide
  • Juan-Pablo Montero

Abstract

An increasing number of monopolization cases have been constructed around the notion of "must-have" items: products that distributors must carry to "compete effectively." Motivated by these cases, we consider a multiproduct setting where upstream suppliers sell their products through competing distributors offering one-stop-shopping convenience to consumers. We show the emergence of products that distributors cannot afford not to carry if their rivals do. A supplier of such products can exploit this must-have property, along with tying and exclusivity provisions, to monopolize adjacent, otherwise-competitive markets. Policy interventions that ban tying or exclusivity provisions may prove ineffective or even backfire.

Suggested Citation

  • Enrique Ide & Juan-Pablo Montero, 2024. "Monopolization with Must-Haves," American Economic Journal: Microeconomics, American Economic Association, vol. 16(3), pages 284-320, August.
    • Handle: RePEc:aea:aejmic:v:16:y:2024:i:3:p:284-320
    DOI: 10.1257/mic.20230018
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    References listed on IDEAS

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    1. Michael Carter, 2001. "Foundations of Mathematical Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262531925, December.
    2. Michael Carter, 2001. "Foundations of Mathematical Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262032899, December.
    3. Greenlee, Patrick & Reitman, David & Sibley, David S., 2008. "An antitrust analysis of bundled loyalty discounts," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1132-1152, September.
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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