Download or read book Diagnosing Foreclosure Due to Exclusive Dealing written by John Asker and published by . This book was released on 2008 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Exclusive dealing arrangements, in which a distributor contracts to work exclusively with a single manufacturer, can be efficiency enhancing or they can be an anticompetitive means to foreclose markets. This paper evaluates the effect of exclusive distribution arrangements on competition inthe Chicago beer market in 1994. A diagnostic test is provided to judge whether exclusive arrangements between brewers and their distributors lead to foreclosure. To implement this test I estimate a model of consumer demand and firm behavior that incorporates industry details and allows fordistribution through exclusive and shared channels. The test indicates thatforeclosure effects are not present in this market, suggesting that the most likely effect of intervention would be to reduce social welfare.