Contracts as a Barrier to Entry in Markets with Nonpivotal Buyers

• 成果类型: Article
• 署名作者: Bedre-Defolie, Ozlem; Biglaiser, Gary
• 署名单位: European School of Management & Technology; University of North Carolina; University of North Carolina Chapel Hill
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20151710
• 发表日期: 2017
• 页码: 2041-2071
• 关键词: naked exclusion; switching costs; monopoly

摘要

Considering markets with nonpivotal buyers, we analyze the anti-competitive effects of breakup fees used by an incumbent facing a more efficient entrant in the future. Buyers differ in their intrinsic switching costs. Breakup fees are profitably used to foreclose entry, regardless of the entrant's efficiency advantage or level of switching costs. Banning breakup fees is beneficial to consumers. The ban enhances the total welfare unless the entrant's efficiency is close to the incumbent's. Inefficient foreclosure arises not because of rent shifting from the entrant, but because the incumbent uses a long-term contract to manipulate consumers' expected surplus from not signing it.