Vertical Foreclosure Using Exclusivity Clauses: Evidence from Shopping Malls
37 Pages Posted: 17 Sep 2013 Last revised: 27 Nov 2013
Date Written: November 19, 2013
Abstract
Exclusive contracts are one of the most controversial topics in the economic analysis of antitrust. Yet, very few empirical papers analyze the determinants and the consequences of exclusive contracts. In this paper, I study exclusive contracts between hamburger restaurants and Israeli shopping malls, in which mall owners commit to prohibiting additional hamburger restaurants from entering their malls. I investigate the determinants of these exclusive contracts and examine how such contracts affect the number of hamburger restaurants and their sales. I show that exclusive contracts are less likely to be adopted in larger malls, in malls that face more competition from other malls, and in malls that opened before 1993, when McDonald's and Burger King entered the Israeli market. I then use the mall's opening year - before or after 1993 - as an instrumental variable to estimate a negative effect of exclusive contracts on the number of restaurants and on total mall hamburger sales. My findings are generally consistent with anti-competitive vertical foreclosure models.
Keywords: vertical restraints, exclusive dealing, shopping malls, antitrust, foreclosure
JEL Classification: K21, L42
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Vertical Foreclosure in Experimental Markets
By Stephen Martin, Hans-theo Normann, ...
-
Foreclosure with Incomplete Information
By Lucy White
-
Vertical Antitrust Policy as a Problem of Inference
By James C. Cooper, Luke M. Froeb, ...
-
Vertical Antitrust Policy as a Problem of Inference
By James C. Cooper, Luke M. Froeb, ...
-
A World of Uncertainty: Economics and the Globalization of Antitrust
By Ken Heyer
-
Exclusive Dealing Intensifies Competition for Distribution
By Kevin M. Murphy and Benjamin Klein
-
Talking 'Bout My Antitrust Generation: Competition for and in the Field of Competition Law