Adverse Selection and Partial Exclusive Dealing

Abstract

I reconcile a disagreement in the literature regarding the impact of downstream price competition on anti-competitive exclusive dealing, and then extend the exclusive dealing literature to accommodate adverse selection. Adverse selection expands the scope of inefficient exclusion, and may also explain policies of partial exclusion, in which an incumbent prots by locking up select retailers even though the entrant's product is still competitively supplied in equilibrium. I relate my results to recent antitrust cases against Intel.

Keywords: Exclusive Dealing, Partial Exclusion, Intel

JEL Classification: K21, L4, L11