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dc.contributor.authorElhauge, Einer Richard
dc.contributor.authorWickelgren, Abraham
dc.date.accessioned2017-01-24T20:02:19Z
dc.date.issued2011
dc.identifier.citationEiner Elhauge & Abraham Wickelgren, Anti-Competitive Exclusion and Market Division Through Loyalty Discounts (Harvard John M. Olin Discussion Paper Series, No. 707, Sept. (2011).en_US
dc.identifier.issn1936-5357en_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:30064393
dc.description.abstractWe show that loyalty discounts create an externality among buyers even without economies of scale or downstream competition, and whether or not buyers make any commitment. Each buyer who signs a loyalty discount contract softens competition and raises prices for all buyers. We prove that, provided the entrant’s cost advantage is not too large, with enough buyers, this externality implies that in any equilibrium some buyers sign loyalty discount contracts, reducing total welfare. Moreover, if loyalty discounts require buyers to commit to buy only from the incumbent, there exists an equilibrium in which all buyers sign, foreclosing the rival entirely. As a result, the incumbent can use loyalty discounts to increase its profit and decrease both buyer and total welfare.en_US
dc.language.isoen_USen_US
dc.publisherJohn M. Olin Center for Law, Economics, and Business. Harvard Law School.en_US
dc.relation.isversionofhttp://www.law.harvard.edu/programs/olin_center/papers/707_Elhauge.phpen_US
dc.relation.hasversionhttp://ssrn.com/abstract=1937658en_US
dash.licenseLAA
dc.titleAnti-Competitive Exclusion and Market Division Through Loyalty Discountsen_US
dc.typeResearch Paper or Reporten_US
dc.description.versionVersion of Recorden_US
dc.relation.journalThe Harvard John M. Olin Discussion Paper Seriesen_US
dash.depositing.authorElhauge, Einer Richard
dc.date.available2017-01-24T20:02:19Z
dash.contributor.affiliatedElhauge, Einer


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