Exclusivity and exclusion on platform Markets

Subhasish M. Chowdhury, Stephen Martin

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)
54 Downloads (Pure)

Abstract

We examine conditions under which an exclusive license granted by the upstream producer of a component that some consumers regard as essential to one of two potential suppliers of a downstream platform market can make the unlicensed supplier unprofitable, although both firms would be profitable if both were licensed. If downstream varieties are close substitutes, an exclusive license need not be exclusionary. If downstream varieties are highly differentiated, an exclusive license is exclusionary, but it is not in the interest of the upstream firm to grant an exclusive license. For intermediate levels of product differentiation, an exclusive license is exclusionary and maximizes the upstream firm’s payoff.

Original languageEnglish
Pages (from-to)95-118
JournalJournal of Economics
Volume120
Issue number2
Early online date21 Jun 2016
DOIs
Publication statusPublished - Mar 2017

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