This paper compares exclusive dealing and market share contracts in a model of naked exclusion. We discuss how the contracts work and identify a fundamental trade-off that arises:
market share contracts are better at maximizing a seller's benefit from foreclosure (because they allow the seller to obtain any foreclosure level it desires), whereas exclusive-dealing
contracts are better at minimizing a seller's cost of foreclosure (because, unlike with market share contracts, the seller does not have to overpay for the units it forecloses). We identify
settings in which each can be more profitable and show that welfare can be worse under market share contracts.
"Market Share Contracts, Exclusive Dealing, and the Integer Problem."
American Economic Journal: Microeconomics,
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Economics of Contract: Theory
Oligopoly and Other Imperfect Markets
Transactional Relationships; Contracts and Reputation; Networks