Open Access. Powered by Scholars. Published by Universities.®
![Digital Commons Network](http://assets.bepress.com/20200205/img/dcn/DCsunburst.png)
Social and Behavioral Sciences Commons™
Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Social and Behavioral Sciences
Applications Barriers To Entry And Exclusive Vertical Contracts In Platform Markets, James Prieger, Wei-Min Hu
Applications Barriers To Entry And Exclusive Vertical Contracts In Platform Markets, James Prieger, Wei-Min Hu
James E. Prieger
Our study extends the empirical literature on whether vertical restraints are anticompetitive. We focus on exclusive contracting in platform markets, which feature indirect network effects and thus are susceptible to applications barriers to entry. Exclusive contracts in vertical relationships between the platform provider and software supplier can heighten entry barriers. We test these theories in the home video game market. We find that indirect network effects from software on hardware demand are present, and that exclusivity takes market share from rivals, but only when most games are non-exclusive. The marginal exclusive game contributes virtually nothing to console demand. Thus, allowing …