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Wholesale most-favored-nation clauses and price discrimination with negative consumption externalities: equivalence results

Author

Listed:
  • Felipe Avilés-Lucero

    (Central Bank of Chile)

  • Andre Boik

    (University of California Davis)

Abstract

Most-favored-nation (MFN) clauses in wholesale contracts have been the subject of recent controversy and renewed antitrust scrutiny. We demonstrate that a vertical environment where MFN clauses may be endogenously adopted shares equivalence properties with an environment where a final goods monopolist sells a good exhibiting negative consumption externalities directly to consumers and is faced with an exogenously imposed uniform pricing requirement. By leveraging these equivalence results, we are able to offer a new and useful framework for assessing the welfare effects of wholesale MFNs and which generates new insights.

Suggested Citation

  • Felipe Avilés-Lucero & Andre Boik, 2018. "Wholesale most-favored-nation clauses and price discrimination with negative consumption externalities: equivalence results," Journal of Regulatory Economics, Springer, vol. 54(3), pages 266-291, December.
    • Handle: RePEc:kap:regeco:v:54:y:2018:i:3:d:10.1007_s11149-018-9371-0
    DOI: 10.1007/s11149-018-9371-0
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    Cited by:

    1. Michele Bisceglia & Jorge Padilla & Salvatore Piccolo, 2019. "When Prohibiting Platform Parity Agreements Harms Consumers," CSEF Working Papers 542, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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    More about this item

    Keywords

    MFNs; Vertical; Foreclosure; Price discrimination;
    All these keywords.

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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