This paper studies a model whereby exclusive dealing (ED) can both promote investment and foreclose a more efficient supplier. Since ED promotes the incumbent seller's investment, the seller and the buyer realize a greater surplus from bilateral trade under exclusivity. Hence, the parties involved may sign an ED contract that excludes a more efficient entrant in circumstances where ED would not arise absent investment. The paper therefore invites a more cautious attitude towards accepting possible investment promotion arguments as a defense for ED.
Fumagalli, C., Motta, M., & Rønde, T. (2012). Exclusive Dealing: Investment Promotion May Facilitate Inefficient Foreclosure. Journal of Industrial Economics, 60(4), 599-608. https://doi.org/10.1111/joie.12006