Editing Exclusive dealing (section)

{{Short description|Anti-competitive business practice where a supplier limits the rights of the buyer}}
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{{Competition law}}

In [[Law and economics|economics and law]], '''exclusive dealing''' arises when a supplier entails the buyer by placing limitations on the rights of the buyer to choose what, who and where they deal.<ref>{{cite journal|title=Exclusive Dealing|last1=Bernheim|first1=B. Douglas|last2=Whinston|first2=Michael D.|date=February 1998|journal=[[Journal of Political Economy]]|volume=106|number=1|pages=64–103|publisher=[[The University of Chicago Press]]|doi=10.1086/250003|jstor=10.1086/250003}}</ref> This is against the law  in most countries which include the USA, Australia and Europe when it has a significant impact of substantially [[Anti-competitive practices|lessening the competition]] in an industry.<ref name="accc">{{Cite web|url=https://www.accc.gov.au/business/competition/exclusive-dealing|title=Exclusive dealing|website=accc.gov.au|date=9 January 2013 |publisher=[[Australian Competition & Consumer Commission]]|access-date=January 20, 2023}}</ref> When the sales outlets are owned by the supplier, exclusive dealing is because of [[vertical integration]],<ref>{{cite journal|title=Vertical integration, exclusive dealing, and ''expost'' cartelization|last1=Chen|first1=Yongmin Chen|last2=Riordan|first2=Michael H.|date=March 2007|journal=[[The RAND Journal of Economics]]|volume=38|number=1 (Spring 2007)|pages=1–21|doi=10.1111/j.1756-2171.2007.tb00041.x|jstor=25046289|publisher=[[Wiley (publisher)|Wiley]]|url=https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=6e39283a4d084a5c35d9c88430692e90abb91e4b|format=PDF|access-date=January 20, 2023|via=[[Pennsylvania State University]]|url-access=subscription}}</ref> where the outlets are independent exclusive dealing is illegal (in the US)<ref>{{cite journal|title=The competitive effects of exclusive dealing: Evidence from the U.S. beer industry|last=Sass|first=Tim R.|date=April 2005|journal=International Journal of Industrial Organization|volume=23|issue=3–4|pages=203–225|doi=10.1016/j.ijindorg.2005.01.006}}</ref> due to the Restrictive Trade Practices Act, however, if it is registered and approved it is allowed. While primarily those agreements imposed by sellers are concerned with the comprehensive literature on exclusive dealing, some exclusive dealing arrangements are imposed by buyers instead of sellers.<ref name="mills">{{cite journal|title=Buyer-Induced Exclusive Dealing|last=Mills|first=David E.|url=https://economics.virginia.edu/sites/economics.virginia.edu/files/Buyer-Induced%20Exclusive%20Dealing1.pdf|access-date=January 20, 2023|doi=10.1002/soej.12218|journal=Southern Economic Journal|volume=84|issue=1|pages=66–81|date=July 2017}}</ref>

Exclusive dealing can be  considered as a  barrier to entry<ref>{{cite journal|title=Exclusive Dealing as a Barrier to Entry? Evidence from Automobiles|last1=Nurski|first1=Laura|last2=Verboven|first2=Frank|date=July 2016|journal=[[The Review of Economic Studies]]|volume=83|issue=3|pages=1156–1188|doi=10.1093/restud/rdw002|via=[[Oxford University Press]]}}</ref> especially in market that operate under imperfect competition, which is either [[Monopoly]] or [[Oligopoly]] where there is price and [[product differentiation]] as well as an imbalance of market power between incumbent, entrants and competitors due to the existing of vertical integrations  within the market, leading to market inefficiencies.