Economic Analysis of Sequential Vertical Contracting Environments

University Of Rochester, Rochester NY

Investigators

Abstract

This research will provide an economic analysis of sequential contracting among vertically related firms. The goal of the research is to develop new theory, integrate existing theory, shed new light on some important contracting strategies, and offer guidance for antitrust policy makers. The agenda is timely in that it addresses some of the major current policy concerns in antitrust, including the use of exclusivity agreements (exclusive dealing and exclusive territories) in monopolization cases, the role of countervailing buyer power in merger analysis, the economic effects of slotting allowances (lump-sum payments from manufacturers to retailers), and whether and why large buyers might negotiate most-favored-customer clauses in their supply contracts. In addition, it will shed new light on when price discrimination in intermediate goods markets may be harmful and, hence, when enforcement of the Robinson-Patman Act may be in the social interest.