American Economic Review: Vol. 103 No. 6 (October 2013)


Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter


AER - All Issues

AER Forthcoming Articles

Competition with Exclusive Contracts and Market-Share Discounts

Article Citation

Calzolari, Giacomo, and Vincenzo Denicolò. 2013. "Competition with Exclusive Contracts and Market-Share Discounts." American Economic Review, 103(6): 2384-2411.

DOI: 10.1257/aer.103.6.2384


We analyze firms that compete by means of exclusive contracts and market-share discounts (conditional on the seller's share of customers' total purchases). With incomplete information about demand, firms have a unilateral incentive to use these contractual arrangements to better extract buyers' informational rents. However, exclusive contracts intensify competition, thus reducing prices and profits and (in all Pareto undominated equilibria) increasing welfare. Market-share discounts, by contrast, produce a double marginalization effect that leads to higher prices and harms buyers. We discuss the implications of these results for competition policy

Article Full-Text Access

Full-text Article

Additional Materials


Calzolari, Giacomo (U Bologna)
Denicolò, Vincenzo (U Leicester and U Bologna)

JEL Classifications

D43: Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
D83: Search; Learning; Information and Knowledge; Communication; Belief
D86: Economics of Contract: Theory
K21: Antitrust Law
L14: Transactional Relationships; Contracts and Reputation; Networks
L42: Vertical Restraints; Resale Price Maintenance; Quantity Discounts

American Economic Review

Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)


AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals

AEA Member Login:

AEAweb | AEA Journals | Contact Us