TY  - JOUR
AU  - Bernheim,B. Douglas
AU  - Whinston,Michael D.
TI  - Exclusive Dealing
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5666
PY  - 1996
Y2  - July 1996
UR  - http://www.nber.org/papers/w5666
L1  - http://www.nber.org/papers/w5666.pdf
N1  - Author contact info:
B. Douglas Bernheim
Department of Economics
Stanford University
Stanford, CA 94305-6072
Tel: 650/725-8732
Fax: 650/725-5702
E-Mail: bernheim@stanford.edu

Michael D. Whinston
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL  60202
Tel: 847/491-8260
Fax: 847/491-7001
E-Mail: mwhinston@northwestern.edu
AB  - In this paper, we provide a conceptual framework for understanding the phenomenon of exclusive dealing, and we explore the motivations for and effects of its use.  For a broad class of models, we characterize the outcome of a contracting game in which manufacturers may employ exclusive dealing provisions in their contracts.  We then apply this characterization to a sequence of specialized settings.  We demonstrate that exclusionary contractual provisions may be irrelevant, anticompetitive, or efficiency-enhancing, depending upon the setting.  More specifically, we exhibit the potential for anticompetitive effects in non-coincident markets (that is, markets other than the ones in which exclusive dealing is practiced), and we explore the potential for the enhancement of efficiency in a setting where common representation gives rise to incentive conflicts.  In each instance, we describe the manner in which equilibrium outcomes would be altered by a ban on exclusive dealing.  We demonstrate that a ban may have surprisingly subtle and unintended effects.
ER  -