The Competitive Effects of Vertical Agreements: Comment

Abstract

Recent economic analyses of vertical restraints and integration emphasize the circumstances under which these arrangements are socially efficient. Efficiency claims have proven contentious, however, for exclusive dealing, a vertical restraint that prohibits any outlet carrying a manufacturer's product from stocking substitute brands. This paper analyzes the impact of exclusive dealing on competition and allocative efficiency. Opinions expressed on the impact of exclusive dealing range from the extreme view that it is invariably anticompetitive, to the view that it is always procompetitive. The U.S. Supreme Court has concluded that in hundreds if not thousands of communities where there is a single retailer for a product,