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Exclusionary Practices in Two-Sided Markets: The Effect of Radius Clauses on Competition between Shopping Centers

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  • Götz, Georg
  • Brühn, Tim

Abstract

This paper analyzes exclusionary conduct of platforms in two-sided markets. Motivated by recent antitrust cases against shopping centers introducing radius restrictions on their tenants, we provide a discussion of the likely positive and normative effects of exclusivity clauses, which prevent tenants from opening outlets in other shopping centers covered by the clause. In a standard two-sided market model, we analyze the incentives of an incumbent shopping center to introduce exclusivity clauses when faced by entry of a rival shopping center. We show that exclusivity agreements are especially profitable and detrimental to social welfare if competition is intense between the two shopping centers. We argue that the focus of courts on market definition is misplaced in markets determined by competitive bottlenecks.

Suggested Citation

  • Götz, Georg & Brühn, Tim, 2016. "Exclusionary Practices in Two-Sided Markets: The Effect of Radius Clauses on Competition between Shopping Centers," VfS Annual Conference 2016 (Augsburg): Demographic Change 145627, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc16:145627
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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