Can Naked Exclusion Be Procompetitive?

Antitrust scholars have argued that exclusive contracts have anticompetitive, or at best neutral effects, if no efficiencies are generated. In contrast, this paper shows that exclusive contracts can have procompetitive effects, provided buyers are imperfect downstream competitors and contract breach is feasible. In that case an efficient entrant is not necessarily foreclosed through exclusive contracting but induces buyers to breach. Because breaching buyers have to pay expectation damages to the incumbent, the downstream profits they obtain when breaching must be large enough. Therefore, the entrant needs to set a lower wholesale price than absent exclusive contracting, leading to lower final consumer prices and higher welfare

A Game Theoretic Analysis of Incentives in Content Production and Sharing over Peer-to-Peer Networks

User-generated content can be distributed at a low cost using peer-to-peer (P2P) networks, but the free-rider problem hinders the utilization of P2P networks. In order to achieve an efficient use of P2P networks, we investigate fundamental issues on incentives in content production and sharing using game theory. We build a basic model to analyze non-cooperative outcomes without an incentive scheme and then use different game formulations derived from the basic model to examine five incentive schemes: cooperative, payment, repeated interaction, intervention, and enforced full sharing. The results of this paper show that 1) cooperative peers share all produced content while non-cooperative peers do not share at all without an incentive scheme; 2) a cooperative scheme allows peers to consume more content than non-cooperative outcomes do; 3) a cooperative outcome can be achieved among non-cooperative peers by introducing an incentive scheme based on payment, repeated interaction, or intervention; and 4) enforced full sharing has ambiguous welfare effects on peers. In addition to describing the solutions of different formulations, we discuss enforcement and informational requirements to implement each solution, aiming to offer a guideline for protocol designers when designing incentive schemes for P2P networks.Comment: 31 pages, 3 figures, 1 tabl

Communication, cooperation and collusion in team tournaments - An experimental study

We study the effects of communication in an experimental tournament between teams. When teams, rather than individuals, compete for a prize there is a need for intra-team coordination in order to win the inter-team competition. Introducing communication in such situations may have ambiguous effects on effort choices. Communication within teams may promote higher efforts by mitigating the internal free-rider problem. Communication between competing teams may lead to collusion, thereby reducing efforts. In our experiment we control the channels of communication by letting subjects communicate through an electronic chat. We find, indeed, that communication within teams increases efforts and communication between teams reduces efforts. We use team members’ dialogues to explain these effects of communication, and check the robustness of our results