Naked exclusion in the lab: The case of sequential contracting

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6 Citations (Scopus)

Abstract

In the context of the naked exclusion model of Rasmusen, Ramseyer
and Wiley [1991] and Segal and Whinston [2000b], we examine whether
sequential contracting is more conducive to exclusion in the lab, and
whether it is cheaper for the incumbent than simultaneous contracting.
We find that an incumbent who proposes contracts to buyers sequentially,
excludes significantly more often than an incumbent who proposes
contracts simultaneously. In contrast to theory, this comes at a
substantial cost for the incumbent. Accounting for the observation that
buyers are more likely to accept an exclusive contract the higher the
payment, substantially improves the fit between theoretical predictions
and observed behavior.
Original languageEnglish
Pages (from-to)137-166
JournalJournal of Industrial Economics
Volume62
Issue number1
DOIs
Publication statusPublished - 2014

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