Essays on exclusive dealing and procurement (Illinois)

This dissertation investigates exclusive dealing practices and procurement auctions. An exclusive dealing arrangement, between a manufacturer and a distributor, stops a distributor selling the products of the manufacturer's rivals. Such agreements raise antitrust concerns, since they may restrict the access of upstream rivals to distributors. The procurement auctions investigated in this dissertation are known as scoring auctions. In these auctions a pre-announced "scoring rule" is used to allocate a score to each bundle of attributes offered by the bidders in the auction. This score is used to decide on the winner and form of the final contract.; Chapters 2 and 3 focus on exclusive dealing arrangements. Chapter 2 addresses the central policy issue around exclusive dealing; whether it gives rise to foreclosure, in the sense of restricting access to higher quality distribution. Chapter 3 attempts to measure the benefits that accrue to firms that use exclusive dealing arrangements, while taking an agnostic view of its motivations. Both these chapters are empirical in nature, using data drawn from the Greater Chicago beer market, and share a common methodological structure.; The approach employed in these two chapters is use an estimated demand system and structural model of the industry to infer underlying cost and demand conditions from firm pricing behavior. Once this is done, tests are developed to answer the research questions specific to each chapter. Chapter 2 concludes that there is little evidence of foreclosure in the Chicago beer market. Chapter 3 concludes that exclusivity agreements have large effects on costs, profits and welfare, suggesting that a regime change may change welfare by up to 40%.; Chapter 4 investigates the determination of equilibrium bidding in scoring auctions and presents new results on the optimal design of these auctions. This chapter represents joint work with Estelle Cantillon. We demonstrate a link between equilibria in quasi-linear scoring auctions with multidimensional private information and the well known single unit IPV auctions, and use this link to derive a revenue equivalence theorem. The optimal design of the scoring auction is also discussed.