A seminal work by Fumagalli and Motta (2006) explored that an incumbent manufacturer
cannot deter an entry by exclusive dealing contract with distributors. This paper extends the
.amework of Fumagalli and Motta and examines a situation in which an incumbent distributor
tries to deter an entry of efficient distributor by exclusive dealing contracts with manufacturers.
The result of this paper is quite opposite to that of Fumagalli and Motta. The exclusion can be
successful. It is an unique equilibrium. In this sence, the effects of exclusive dealing depends
on the mareket stiructure. Moreover, we extend our model with an entrant even in upstream.
It may decrease the possibility of exclusion but may promote the inefficient vertical relation
between the entrants.
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