Robust Exclusion Through Loyalty Discounts With Buyer Commitment
نویسندگان
چکیده
منابع مشابه
Anti-Competitive Exclusion and Market Division Through Loyalty Discounts
We show that loyalty discounts create an externality among buyers even without economies of scale or downstream competition, and whether or not buyers make any commitment. Each buyer who signs a loyalty discount contract softens competition and raises prices for all buyers. We prove that, provided the entrant’s cost advantage is not too large, with enough buyers, this externality implies that i...
متن کاملRobust Exclusion Through Loyalty Discounts
We consider loyalty discounts whereby the seller promises to give buyers who commit to buy from it a lower price than the seller gives to uncommitted buyers. We show that an incumbent seller can use loyalty discounts to soften price competition between itself and a rival, which raises market prices to all buyers. Each individual buyer’s agreement to a loyalty discount externalizes most of the h...
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We consider a two-period model with two sellers and one buyer in which the efficient outcome calls for the buyer to purchase one unit from each seller in each period. We show that when the buyer’s valuations between periods are linked by switching costs and at least one seller is financially constrained, there exist plausible conditions under which exclusion arises as the unique equilibrium out...
متن کاملBargaining Over Loyalty
id=1937658; Einer Elhauge & Abraham L. Wickelgren, Robust Exclusion Through Loyalty Discounts (Harvard Law Sch. Pub. Law & Legal Theory Working Paper Series, Paper No. 10-15, 2010) [hereinafter Elhauge & Wickelgren, Robust Exclusion], available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1544008; Patrick Greenlee & David Reitman, Competing with Loyalty Discounts (Econ. Analysis Grp., ...
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Loyalty discounts are agreements to sell at a lower price to buyers who buy all or most of their purchases from the seller. This article proves that loyalty discounts can create anticompetitive effects, not only because they can impair rival efficiency, but also because loyalty discounts can perversely discourage discounting even when they have no effect on rival efficiency. The essential reaso...
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