An experimental study of exclusive contractsAngela M. Smith International Journal of Industrial Organization, 2011, vol. 29, issue 1, 4-13 Abstract: This paper reports results from a laboratory experiment based on exclusive contracts that may theoretically lead to inefficient "naked exclusion" of a potential rival. The data indicate that changes in the number of buyers in the market have no significant effect on exclusion rates but the likelihood of inefficient exclusion is decreased both when a larger fraction of signed buyers are needed to deter a rival's entry and when buyers engage in non-binding communication. These results have antitrust implications both in terms of helping to identify "at-risk" market characteristics and suggesting potential competition-enhancing strategies. A sub-game of the experiment where buyers make signing decisions can be illustrated as a coordination game with the unique feature that payoffs are affected by a separate but interested party (the incumbent seller). I find that the height of the potential function and relevant basin of attraction, especially when combined with quantal response estimation, have larger predictive power in this sub-game than several other equilibrium selection criteria. Keywords: Exclusive; contract; Naked; exclusion; Laboratory; experiment; Coordination; game; Potential; function; Quantal; response; equilibrium (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:29:y:2011:i:1:p:4-13 Access Statistics for this article International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal More articles in International Journal of Industrial Organization from Elsevier |
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