Paper Abstract
718. Claudia M. Landeo & Kathryn E. Spier, Exclusive Dealing and Market Foreclosure: Further Experimental Results, 07/2012; subsequently published in Journal of Institutional and Theoretical Economics, Vol. 168, 2012, 150-170.
Abstract: This paper reports further experimental results on exclusive dealing contracts. We extend
Landeo and Spier's (2009) work by studying Naked Exclusion in a strategic environment
that involves a four-player, two-stage game. In addition to the roles of seller and buyers,
our experimental environment includes the role of a potential entrant (a fourth passive
player). Our findings are as follows. First, payoff endogeneity increases the likelihood of
exclusion. Second, communication between the potential entrant and the buyers increases
buyers' coordination on their preferred equilibrium (equilibrium with entry) and hence,
reduces the likelihood of exclusion. Entrant-buyers communication also induces more
generous offers.