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Exclusionary Vertical Contracts and Product Market Competition

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  • Yong, Jong-Say

Abstract

This article considers whether a monopolist is able to deter more efficient entrants through contracting with buyers. In the antitrust literature, the Chicago School's stand is that such contracts cannot be anticompetitive; hence vertical contracts should be accorded per se legal status. In a four-stage game with the following features: (1) the incumbent enjoys a first-mover advantage, (2) the entrant must incur some sunk cost to enter the market, and (3) entry is uncertain, the author shows that vertical contracts can be anticompetitive if there exists product-market competition. Thus, the author advocates caution in treating all contracts as per se legal. A three-factor, repeated-measures experiment tested the effect of leadership style (charismatic, structuring, and considerate) on performance improvement on a manufacturing task over four trials. Findings from a repeated-measures multivariate analysis of variance indicated that individual exposed to considerate leadership had superior initial performance but that this difference faded over time. Further analysis indicated that self-efficacy fully mediated the relationship between leadership style and performance. Copyright 1999 by University of Chicago Press.

Suggested Citation

  • Yong, Jong-Say, 1999. "Exclusionary Vertical Contracts and Product Market Competition," The Journal of Business, University of Chicago Press, vol. 72(3), pages 385-406, July.
    • Handle: RePEc:ucp:jnlbus:v:72:y:1999:i:3:p:385-406
    DOI: 10.1086/209619
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    References listed on IDEAS

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    1. Oliver Hart & Jean Tirole, 1990. "Vertical Integration and Market Foreclosure," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1990 Micr), pages 205-286.
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    Cited by:

    1. Kitamura Hiroshi, 2011. "Exclusive Contracts under Financial Constraints," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-31, September.
    2. Cédric Argenton, 2010. "Exclusive Quality," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 690-716, September.
    3. Kitamura, Hiroshi & Matsushima, Noriaki & Sato, Misato, 2018. "Exclusive contracts with complementary inputs," International Journal of Industrial Organization, Elsevier, vol. 56(C), pages 145-167.
    4. Hiroshi Kitamura & Noriaki Matsushima & Misato Sato, 2023. "Which is better for durable goods producers, exclusive or open supply chain?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(1), pages 158-176, January.
    5. Gratz, Linda & Reisinger, Markus, 2013. "On the competition enhancing effects of exclusive dealing contracts," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 429-437.
    6. Hiroshi Kitamura & Noriaki Matsushima & Misato Sato, 2018. "Naked exclusion under exclusive-offer competition," ISER Discussion Paper 1021, Institute of Social and Economic Research, Osaka University.
    7. Kamoto, Shinsuke, 2015. "Strategic capacity expansion under a potential entry threat," International Review of Economics & Finance, Elsevier, vol. 38(C), pages 157-177.
    8. NISHITATENO Shuhei, 2015. "Market Structure and Entry: Evidence from the intermediate goods market," Discussion papers 15081, Research Institute of Economy, Trade and Industry (RIETI).
    9. Hiroshi Kitamura & Misato Sato & Koki Arai, 2014. "Exclusive contracts when the incumbent can establish a direct retailer," Journal of Economics, Springer, vol. 112(1), pages 47-60, May.
    10. Frago Kourandi & Nikolaos Vettas, 2024. "Dynamic Vertical Foreclosure with Learning-by-Doing Production Technologies," Games, MDPI, vol. 15(2), pages 1-23, February.
    11. repec:dpr:wpaper:0918 is not listed on IDEAS
    12. Gratz, Linda & Reisinger, Markus, 2012. "Can Naked Exclusion Be Procompetitive?," Discussion Papers in Economics 12733, University of Munich, Department of Economics.
    13. Zhijun Chen & Greg Shaffer, 2014. "Naked exclusion with minimum-share requirements," RAND Journal of Economics, RAND Corporation, vol. 45(1), pages 64-91, March.

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